Problems associated with the fraudulent payments of clients in the medicaid program


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Problems associated with the fraudulent payments of clients in the medicaid program
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United States -- Congress. -- Senate. -- Committee on Government Operations. -- Subcommittee on Federal Spending Practices, Efficiency, and Open Government
U.S. Govt. Print. Off. ( Washington )
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Table of Contents
    Front Cover
        Page i
        Page ii
    Letter of transmittal
        Page iii
        Page iv
    Table of Contents
        Page v
        Page vi
        Page vii
        Page viii
    Statement of conditions
        Page 1
        Page 2
        Page 3
    The State's position and action on the coerced donations situation
        Page 4
        Page 5
        Page 6
        Page 7
        Page 8
    Nursing homes--financial plight and health care
        Page 9
        Page 10
        Page 11
    Findings and conclusions
        Page 12
        Page 13
        Page 14
        Page 15
        Page 16
        Page 17
        Page 18
        Page 19
        Page 20
        Page 21
        Page 22
        Page 23
        Page 24
        Page 25
        Page 26
        Page 27
        Page 28
        Page 29
        Page 30
        Page 31
        Page 32
        Page 33
        Page 34
    Back Cover
        Page 35
        Page 36
Full Text

\/r4. (LIY ..

94th Congress
2d Session




.W,rum .
FU ///0


Investigations and Inquiries Into the Inefficiencies and Special
Problems Associated with Payment and Monitoring of Federal
Funds to Nursing Homes in the State of Florida








Printed for the use of the Committee on Government Operations




-' ~






.\ l.! Al AM IM;] lU L' JIIl', I 'nnerticiit. Chairman
JL IIN L. M4 CLI'.LLAN, A. rkansas H I.\; i.I:S II. 1 '1: ItCY, Illi I'is
IHI:NRY M. JACKSON. W.isliliington JAC ll. K. JAV 'ITS. N.w York
I[:1TUND S. .MIUSKII:. I .Mint i VII. I. AM V. I' 'l-TII. Jln., Delaware
LI'I-:E MI:TCALFP, Montana: BILL BRIOCK. Tennr,-,ee
J.\ME'S B. ALLI:N, .\lianma LOWVII.L P. \I'ICKI:It. JR., Connecticut
SAM NUNN. Geor-ia
l.icii \ i: A. 'i:;M%\N. Clhrcf Counse aind Staff Director
PAUL ITIurl', CouM.%el
ELI E. NOriL-MAN, CountseI
DAVID R. ScI-.\EII:I. CoIitcil
FI:lM AS.-F:I.I N, Int 'csligator
Ei.i a.\- S. -MILLER, Profc..sional Staff Mfemberc
Junx B. CHILDERS. Chlif Couiuscl to the Minority
lRIA..v CuNui.y. Special Counsel to the Minority
MARILYX A. Il.\iRis. Chief Clerk
l:LIzABETI A. I'rJ:AS.T, A..h4.isttnt Chief Clerk

LAWTON CIIILI:S, Florida, Chairman

SA.\M NI'-NN. C(prgi:n
JAM.I:s ,ALI:N, Alabama
J',TIN c;Ii:NN, Ohio

LO\VI:LL P. W-EfICKER, JR.. Connecticut
WILLIAM V. ROT!I, JR., Delaware
BILL BROCK, Tennessee

LESIF:R A. FETTle,. Cliirf Counsel and Staff Director
Ri,]ERT E. COAKLEY, Counsel
CL\ArUDIA T. INGRAM. Minority Counsel
CHIRISTINE SLIIRIDAN BETTS. .4 s.-qistant Chief Clerk
DEBRA P. ALTMAN, Clerical As.iRtant
RONNA C. STO'Nr. Clerical Assistant
3r\RY C. McAULIFFE, llinority Counsel
BARBARA Cr..RKE. ifinority Counsel



Washington, D.C., October G, 1976.
Cai;-n an Cornmittee orn Gove-rnment Operations,
U.S. Senate, Washington, D.C.
DEAR MR. CHAIRMrAx: The Subcommittee on Federal Spending
Practices, Efficiency, and Open Government, conducted investigations
and inquiries into the inefficiencies and special problems associated
with the payment and monitoring of Federal funds to Nursing Homes
in the State of Florida.
Because substantial problems have emerged concerning Nursing
Homes and Medicaid payments which might be of interest to other
congressional committees, I am hereby transmitting for publication as
a committee print, the report by the subcommittee.

Digitized by the Internet Archive
in 2013


Letter of transmittal --------------------------------------- ----- III
Introduction ------------------------------------------------------ VII
Statement of conditions------------------ -------------------------- 1
The State's position and action on the coerced donations situation------- 4
Nursing homes-financial plight and health care---------------------- 9
Findings and conclusions-------------------------------------------- 12
Recommendations -------------------------------------------------- 13

Letter from Mr. Charles F. Rollins to Senator Chiles------------- ------ 17
Letter from Mr. Percy A. Hull to Senator Chiles with attachments------ 17
Florida Health and Rehabilitative Services Memnio to Mrs. Leah Ball
and her response------------------------------------------------- 19
Florida's Health and Rehabilitative Services Summary status of nursing
homes contribution problem in Florida------------ ------------------ 20
Letter from Royal Glades Convalescent Home to Mr. Porris, dated
December 14, 1974----------------------------------- .21
Statement of Senator Chiles at hearing in Miami on August 17, 1976------ 22
Testimony of Mr. Arthur Harris at hearing in Miami on August 17, 1976-- 23
Copy of contributor's letter and attachments--------------------------- 24
Operations letter developed by State of Florida, Department of Health
and Rehabilitative Services---------------------------------------- 25
Letter to Secretary Page from Mr. Arthur Harris---------------------- 27
HRS memo from Mr. Charles Busby dated June 3, 1976----------------- 28
HRS memo from Mr. Charles Hall to Nursing Home Administrators----- 31
Miami News article by Carol Gentry dated June 4, 19761 11---------- 32
Miami News editorial dated June 7, 1976------------------------------ 32
Miami News article by Carol Gentry dated June 5, 1976 ----------------- 33


The medicaid program, in mo,4 States, cover? as a k. per
sons who receive supplemental securityV income benefits and "families
with aid to dependent children. Those benefits normally include: In-
patient hospital care; outpatient hospital services; and other .labora-
tory and X-ray services.
The situation re:rzi'ding the reported illegal payment of funds in
the form of "'coerced donations" from medicaid patients to nursing
homes was made available to the subcommittee early in 1976. The
reports came to the subcommniittee through constituent letters and a
series of newspaper articles by Carol Gentry of the Miami News.
The opportunity for abuse clearly exists in any area where the
poor and elderly make up a large percentage of the population.
Florida's "over-65" population is the highest in the Nation. nearly
18 percent.
It is estimated that about 15,000 of the 30,000-plus elderly persons
living in nursing hom-is are medicaid recipients. These recipients, in
many cases, are led to believe that the only payment they or their
families will have to make will be adequately covered by medicaid
The recently passed Florida State law, the Nursing Home Reform
Act, contains provisions mandatinig civil penalties for unlawfully
requiring "donations" as a condition for accepting, maintaining, or
treatment of a medicaid patient.
The subcommittee heard from 14 witnesses in itV hearing in Miami
but investigators con ferred with many other persons in ascertaining
the procedures and situation behind the "nursing home donation"

Several witnes.-es testified before the subcommittee and related their
experiences with nursing homes and the fact that they were forced
to contribute monthly to the facility in order to maintain their rela-
tives in the nursing home.
Senator Lawton Chiles spelled out his position when he said:
Let there be no confusion where I stand on the issue of
high-quality health care.
Without question, I am interested in expanding on thliose
positive features of our present health care delivery system
and in making the system work, particularly for the poor and
elderly. However, there is deep concern in Congress that the
system is not working as Congress intended.
There is concern that with many organizations, the dedica-
tion is not to the patient or the client, but rather to gaining
a. profit.
Congressional committees in both Houses of Congress have
spent a lot of time investigating abuses and fraud in the
medical programs but new revelations spring up daily. So,
I think the concern of Congress is altogether proper.
There is concern by Coiingress that in providing for variety
in medicaid administration, we have also provided for a gen-
eral hodgepodge of individual State program operation.
I recognize, indeed, I have fought for the need for the
States to have some flexibility in administration and I hope
States can maintain some flexible aspects because I do not
believe that the solutions to all problems can be found in
Washington. I guess it boils down to the fact that we have
heard so much about the problems in medicaid and medicare
that we have finally started to listen and be concerned.
We hear about the long delays that persons filing for reim-
bur-oient have to suffer. We hear about the incredible com-
plex medicaid forms that have to be filled out by patients
seeking care. We hear that patients' families are being coerced
into making so-called "donations" to nursing homes as a re-
quirement for their loved ones being accepted.
We hear all of this and we say that clear violation of the
social security law cannot be tolerated and violators must
be firmly dealt with if public credibility for the medicaid
program is to be maintained.
I am aware that there are countless nursing homes in the
State of Florida that are doing a fine job of providing quality
care to the elderly and they are to be commended.
In focusing on the problems, we do not ignore the contribu-
tions. I have been told that many health care providers do


iiit WAilt to accept 1ii dicaid a--c-:! tnme1t lb .caise the rt. e 1 are
ii.- U n1.-i1y lO\v1 ---;ppr,-I Xilmatelyt 41 pcr'cllt of tHie prc ailinig
i'ite. 'Iii-- falct ;lo 1e iiae1 it aill tle ,mre elmLarkale thai
vatild <>ilitrijll1tioi- aret'deadl by m,,a: y 11r..-i ng ]omes. mitl Sit 1xpael's ae .:1T J1elling oult s0o1e 8S8 bil-
]ion1 i i-,i"l 1977? for health prorz'uu-. and I believe that the
A\eria'.t 1c,,ple are willill.g to support lirest, pr( ,rains as
ln'u .'< tlic'y believe tihe p ,r...n, ll:.-, are 10 einir administered
efficiently, e*llectivliv, ;:11id colmpa:;i-onatelvy.
The thlr i.'t of the iii:itt(cr goes 'beyond tlhe dollars involved,
altllit)imIi tIhI.t's a v, li l concern but, rather, it roe.-; rigliht, to the
1point i1:at mnlr li,:alth delivery systemjl involves people, not
,cold statistic- s.
lForiil I;' 1, over I.jii invidiialdls involved in tlie vmedic-
6ail prol:tiin. andl I :n told by I medicaid officials that the
ini.ber will lro evenl higher next year.
Every client, every ta-Xp,,er. every family hlas the right.
to expect M irhu-quahity care and effective enforcement of the
proper laws.
Every example of fraud and ab.-e, that occurs, seriously
,',.proiiise.. the quality and efficiency of health services for
the poor and elderly.

The witnesses at the hearing stated their experiences anid outlined
-it national inci(lents which occurred to them.

r. iIA.\ x. 1My mother, Dora Glas.smn [was] a former patient
of Greviolds Nursin.r Hoome on Dixie ITi Nlway in North Miami
Beach. I was called into the office, and told that, I lhad to put down
1750 a contribution of .'-2.0 a month. Finally, it was brought
down to $100 a month.
Senator Chiles inquired regarding the contribution, "This was not
a volmuintav contribution ?"
Mr. G_ .r'x o
Mr. Gi.ASSMAX. No; this is 'ood arm twi,-tiuu'.

Si*;xioi; CITizENxs
'Mr. FiII.D1)sON.- We [Congress of Senior Citizens] have had many,
many complaints but they [the people] refuse to start [action]. I was
ready to ,,o to court with them but they refused to co to court.
[M.. Fried!-on alluded to the great fear of mist reatment that many
relatives of patients exhibited :]
MIr. FViIr.:iX. There are a few good ones [nursing homes]. Most
of them are ,-na Mns. LI:.\I BALL
Mris. BALL. My fat her was at the Royal Glades Nursing Home from
May 1974 until he died on December 12, 1975. At first [as a patient]

I paid for him monthly. When his funds were down to $500 I was
told he could go on medicare.
I was to apply at the social -ervice office. I went there. I had to sign
a paper which said medicaid would pay, whatever the arrancrenlents
are between medicaid, the social security cheek, and for the State. I
was told that I would have to make arrangements with the home
before they could make arrangements with me.
I asked what arrangements were very foolishly, but that is what
I was told.
First I had to sign a paper which said that the amount of money
that was going to be paid by medicaid and the social security was
to be in full payment for any services to my father.
I then asked what on Earth would any additional money be neces-
sary for. I was told that nursing home busine-zs was a very lucrative
institution. I went to the nursing home. I was told that I would have
to pay $175 a month over and above what medicaid and social security
amounted to.
That was the story from August 1974 until December 1975.
On December 10 I received a letter of December 8 1 from IIRS
which inquired how I was approached as to making payments.
I mailed an answer 2 with all the payments I had made and made
myself available.
I said, "I am available to give details of service if you want them.
I do appreciate that someone is interested in inquiring. My phone
number is available and I am available any other time that you want."

Mr. PORmIS. My mother-in-law is in the home. She has been in the
Royal Glades Home for 2 years. Prior to that for a year and a half
she was in another home.
And at the time she went in we had her in our home for 2 years
and my wife was sick and had a heart attack and she couldn't take
care of her.
We went to Royal Glades. I had to put up $600 at once and then
$200 monthly. That was a must, otherwise they wouldn't take her
into the home.
It was about 4 months after she went in. * She was a medicaid
patient. * My wife was sick so we couldn't afford to pay $200 a
month. Finally, I went in to see the administrator. I asked him to
reduce the amount we had to pay.
He reduced it to $150. And then time went on. I wasn't working.
My wife was sick. We couldn't afford to pay that much. But they
insisted upon the $150.
I have a letter with me which definitely states-it is quite a large
letter if you care to read it. It states, the last paragraph, "We regret
this imposition but we haven't any choice and must ask that you make
other arrangements to have Mary Kaufman transferred out from our
facility if you are unable to continue your original pledge to our
Torah Fund."
SSee anppndix. p. 19.
2 See appendix, p. 19.

Tihe other oe say- "silleelictarv, Iy and I was playing close to 2
yea!- for t liat.
T1 I )ec,.ei wr 9174 t1 te lat ir part of I)eelle1 'r, t hey I raiisferred her
wit ilout moilr klowlewl._e. itll lt olr kioWledge thley transferred her
to a: lot ler lihome.
T'lhe oti r hlio i e called us upl) tluat Mary Kaiilfillan wa lin their lhomie.

M1r. I )oni \VliitiI Iy of I tV e li:al -taf: If of the I )ep: ritnIeit of Health
aidi lehabilit:itive Sen ice.- t,--fittied 1efole the -l)c ll'lliitte( conl(celii-
i II RS 11 i nv-cI i.,rative act ivitieo. as; follows.
Dou i WIirNVY
\[r. WI[!lM:V. Prior to 1976, the department hlad received scattered
comliiiplaint- about cont riiitionlls being requiired of relatives of medicaid
patients inl nii 'sinI honies.
Ti,-e complaints were inve.-ti:ated at the local administrative
level: however, it was determined at the upper admiiinist rative level
that the ilives-tirationls (li(d lot -lhow sufficient evidence under the exist-
i i.,r laws to takel any affirmative action.
However. toward the end of 1975 and the first part of 1976 these
complaints became more prevalent and more centered and gave us a
focal aspect of things that we needed to look into and the secretary of
tihe lepa l-rtiitil'nt milan.datedl a thorough inv( :A iaiition N, coiiienced on
this imiatter.
Now, thie legal staff of the department was given the lead to utilize
d1iepartmeit resources in invetigrating and determining what action
was available to the depairtiiient, as a result of the investigation.
It 'was approached and is continuing to be approached in two
First of all, the financial deternliiniationl of po:-ible abuses and tlie
conitribit ion aspect through internal audit.
Second. to obtain witines-e., who were willing to state that they
were imakingr these contributions 1upon conditions that were not truly
contributions as thle word is known.
The audits were comeiinlmcedl and are continuing.
They are an ongoiir situation that is continuing right today.
I have with me tlie supervisor, Mr. Ken Connors of our audit de-
partiiieiit, medicaid audit department, and his associate, the field
supervisor in this phase of the investigation. Mr. John Coppinger.
The second aspect has been a little slowed down, Senator, I must
confess. I am not making an apology or as one says, poor mouthing.
We have 1)eeil in tlhe throes, our department of reorganization, the
State legislature mandated on uis a year ago and as a result of whliichli
our legal staff is in the turmoil of establishing patterniis, staffing pat-
terns and stafting up.
As a result of which our inves-tigration into the actual obtaining
of witnesses, names of individuals, interviewing themi and so forth
lias been a little slowed down.


We are anticipating that this will be changed within about approxi-
mately 30 to 60 days and we will be back going into this at great
depth from that aspect of the investigation.
It has been found, essentially in our invest igations, that to (late that
this eliciting of contributions of all these conditions by nursing homes
is fairly widespread.
However, it amazingly seems to center in two geographical areas.
One is the northwest part of Florida and the other one is commonly
called the "Gold Coast," the southeast part of Florida.
Even today there are scattered reports only through other parts of
the State. I mean it is going on in other parts of the State but we work
basically upon where we receive the bulk of the complaints from.
Generally the problem arises in two aspects.
First: A relative determines that he or she can no longer care in
the home for a mnedicaid-eligible client and seeks to place this client in
a nursing home under medicaid.
A given nursing home will then require of the relative a contribu-
tion to the nursing home as a condition of admission. These contribu-
tions vary in a general range from $50 to say $300.
We have found one I believe as high as $400.
Senator CHIiiLES. A month?
Mr. WHITNEY. Yes, a month.
The second way that this situation usually occurs, and this is a con-
dition of continued care, if a patient is in the hospital on medicaid and
then is transferred into a nursing home for rehabilitative care and
then the medicare expires and they go onto medicaid.
At this point the nursing home will approach the relative and
request a contribution from them to continue caring for the patient in
the nursing home.
The department feels that it has, after developing sufficient eviden-
tiary information, several alternative resources.
It may institute a legal action for breach of contract against a nurs-
ing home.
It may determine that the nursing home has breached regulations
sufficient to assess an administrative fine against the nursing home.
It may seek, through the appropriate branch of government, a revo-
cation or a disciplinary action against the nursing home administra-
tor's license.
It may forward any evidentiary matter of possible criminal activity
to the State attorney's office for further action.
It may determine that sufficient evidence exists to seek revocation
of the nursing home license.
As previously stated with staff limitations, the department is con-
tinuing its investigatory aspect and anticipates within 2 to 4 months of
having sufficient evidentiary information to take one or more of the
above-described actions against several nursing homes in the State.
The main concern of the department is not to place a nursing home
out of business as the service is needed for the recipients or clients, but
the action that may be determined to be taken is to require the nursing
home to comply with both State and Federal statutory and regulatory
requirements in this situation.
The legislature of the State of Florida in its 1976 session made con-
siderable revisions in that part of its laws relative to that which is corn-

mnnlv no, ai "aehdicaid tiald" -an1l' d laI'tti(c'ularly in dealing withll
tlip(' contrillution aspect.
Tlis law, with certaiii qualifications, in (flect calluses c(ont0ribitiolns
la1dlte as a c('d1011tion of admission or continued care of a medicaid
,litlnt or patient to be desin:ltedl :is crimes. both misdemeanors and
felon)ics. dl,'!pendii g 110pon the alu(nit o f thle (contributions.
Tie law l)ecolles ffert ive October 1, 197;. The (ldepartlnenit feels that.
t1ilis law will strengllhllen its position in ),eig, al)1e to eflectuate action
in 1Icalini N withi tiis problem.
'iThe leaislaturo furl ier passed adllitional laws directly relating to
tlii; problem which would affect, the licensure and medicaid portions
r'l1tive to nursing lmoIues and effectively strengthen the department's
p,,,it ion.
Uld(lr directt qluLtstiolningr b. Senator Cliles, 'MIr. Whitney shared
otlier facts witli thle subcominittee, as follows:
Mr. WIITNS:. (1) A1)pproximately 50 to 60 nuinin"l homes in the
State have been under some sriti ny for tle, alleod l practice.
(2) The D)epartment of Health and Rehabilitativ e Services,. although
limited stall'wis(, intend to sedl out lItters to all Iuedicaid patients in
nur-inm" holes inquiring if they or their family make coi tributions
to tlhe home where, they are. The department will send tlhe letters to
:ill nmedicaid recipients throughout the State.
(3) A statewide effort to expose( tlie practice (illegal donations) is
under way so that they) can be halted.
(1) Tlhe invest igation of nursing homes would continue. That intcr-
1ial audits of nursing homes would hopefully reveal irregular .,itua-
tions that exist in the 1homies.
(.) The DIepartmneiit of IHealth and Rehlabilitative Services never
gave tacit, or any ki.ind of approval for tlie coercing of patient con-
tributiolns. In fact, tle nursing homes are aware that the IIRS is
cracking down on involuntary contributions.
(6) Reconmmendlations for revocation of some nursing homes licenses
were never favorably acted on becau-(, of in.ufiicient information on
the activities of the nursing hoiiie.

Tie t '-ti mony of Senator Roliert Grahlam. chairman of tlhe State
Senate Committee on. Health and Rehabilitative Services was signifi-
cant and informative as he pointed out the State's efforts at eliminating
nur1-in home abuses through legislation.
11% t:'_ Cz 'C
Senator Gi.RAAr. The Senate Committee on Health and Rehabilita-
tive Services in conjunction with House coninittee did hold hearings
beginrninjg last fall through the last winter on a variety of issues relat-
ing to thle elderly, including nursing ho.mes.
The 1.'.-t! mon, which was developed was significantly in legisla-
tion which w;'s introduced and pas.:ed at the last 1cgislative session
which I would like to review and also will be valuable in a continuing
moii toring and oversight of operations of these program-is.
In that regard some. of the testimony which you have received today
would ,be very valuable to our committee and its responsibility in terms
of monitoring the State agencies which have a responsibility in this
a re a.

Frankly, some of the figures that have been alluded to as to the
instances of abuse today are significantly higher than evidence which
we received 6 months ago which would indicate that either people
today are more willing to come forward with the information or the
problem has escalated in its severity or some combination of that.
The fact that you are considering these issues here in Florida and in
this community is particularly appropriate as we know Florida has
the highest percentage of per:-ons over the a,- of 6.5 of any State in
the Nation-171/ percent.
By the year 2000, it is projected that one in four Floridians will
be 65 years of age or older.
A significant number of these elderly Floridans are institutionalized
in nursing homes-almost 30.000. Of that number half are receiving
medicaid assistance.
Because of the nature of our elderly population, with a high per-
cenitage of persons who caine to Florida at or near retirement, they
are in a real sense multiple-State residents.
They have an association with the community in which they live,
their youth and their middle years, and until their retirement.
This cosmopolitanism makes it appropriate that the Federal Gov-
ernment accepts a significant role-in partnership with Florida-in
assuring that programs cover the entire range of the needs of elderly
persons, while achieving efficiency and effectiveness through produc-
tive interaction.
The Florida Legislature in 1976 enacted a comprehensive program
addressed to the needs of Florida's elderly. Two objectives of this
program were: To enable elderly persons to remain in their homes and
communities by providing supporting programs which will encourage
full and independent lives, and avoid premature institutionalization,
and, to increase the quality of care of the institutionalized elderly.
During the period from October 1975, to February of this year.
the Florida Senate Committee on Health and Rehabilitative Services
held nine hearings throughout the State on concerns of the elderly.
One recurring theme was that many of the 15,000 medicaid-assisted
nursing home patients are not institutionalized for a medical reason.
For example, in St. Petersburg, a physician with the State Depart-
ment of Health and Rehabilitative Services stated that 70 percent
of the medicaid-assisted nursing home patients in that community
could be satisfactorily cared for in their homes or communities, if
adequate community facilities and programs were available.
To encourage the provision of these community-baized programs.
the Community Care for the Elderly Act was proposed and adopted.
This act directs the Department of Health and Rehabilitative
Service to conduct or to contract for demonstration products in at
least three areas of the State to test alternatives to institutionalization
for the elderly.
Such projects may include home-delivered service programs, multi-
service senior center programs, and family placement programs as
needed to assist elderly persons to remain living independently in
their own homes and communities rather than be subjected to un-
necessary or premature placement in a nursing home or other long-
term care facility.

1 ealtll ilaiitellnat' 'c e servicv-t. 1imilienJ ,ki Il 'r a111( chlore serviA'ces, and
Illobile, ncals service woNldlI he available througll lomllle-eli 'vered serv-
ic'e programllls.
11 [lti i-cvlic'le sen, i()r r('t ie' p'ogra' Illw ovlld provide the samew Ser'vieeS
:Is a lomlte-de li-ered lV *'ice p)rograil. anIid III additio)l. w\olIld provide
(,uelIing11, t iel I eplo Is IiioraIice. ad 111 information and referral
.-crY ie.-.
Each t pe(' of progiamV would add additioiiil -ervices. suchI as trans-
port..ation. Jega L anI Itd emiploylimlt .-'rvces, del)en(ding )on local needs
11 id V .-.OU c .'c .
1"ai6ily placeluelit prralS would attack lthe problem of unneces-
sar iJistit lti oimtil izalion i'roiii a different aspect by providing for
plart.iiic(.t of an ldt'l-ly iiV l:on in tIlie home of a cai'etaker, who would
as-it thle elderly person nl nieeting the nornial denialds of daily
living and could be reimbursedI for providing such assistance.
Au additional aspect of the State provides for the establishment
of prog ras of day care for tlie elderly as part of a multiservice
seki0or center program, or iii a lio.,pital or nursing home.
Such program would provide a protective daytime environment
for frail elderly persons who have a regular home, but who might
require adillmission to acute or long-terim health care in the absence of
such pri-rais.
D)ay-care pro gramIs would provide a sheltered physical environment,
at least one mieal a day, re-t facilities, and social activities.
Agencies desiring to contract with tlhe Department of Health and
etlabilitative Services to conduct a community care program may
become eligible to do so by providing at least 25 percent of project
Existing comlmiunity resources and the use of volunteers are to be
maximized in operatinlg program s. Additionally, the Legislature in
tlhe 1976-77 General Appropriations Act authorized the use of vari-
ous funds under the medicaid program to pay for services provided
by community care programs.
The D)epartment of Health and Rehabilitative Services is to evalu-
ate. tlie efl'ectiNveness of coordinated programs of community services
as a means of delaying or avoiding the placing of elderly citizens in
long-term care facilities and report its findings and recommendations
to t lie Florida Legislature.
Even with adequate comuniunity programs, some elderly will still
require tlhe close medical supervision of an extended-care nursing
Although most nursing home administrators have exercised a pro-
fessional and humane concern for their patients, the continuing abuses
within the industry led to the adoption of the Florida Nursing Home
Reform Act.
U)01pon its effectiveness on October 1 of this year, this act will set.
the framework for the State's regulation of Florida nursing homes.
In the area of greatest concern to the sul)conmmnittee-thle unconscion-
able practice of sole nursing homes requiring "donations" as a condi-
tion of accepting or retaining an elderly relative as a medicaid patient,
the Nluirsing I- [one, Reform Act, contains provisions mandating civil
lpenlalties in tlie form of denial, suspension, or revocation of a nursing
home's license for soliciting or receiving contributions which are tied
to the admission, maintenance, or t reatnient of a nursing home patient.

Reinforcing the deterrent of such civil penalties, additional legis-
lation passed during the past session, revised and strengthened Florida
law relating to medicaid fraud.
Under this statute, with certain expections, contributions made as a
condition of admission, or continued care of a medicaid patient, con-
stitute a crime, either a misdemeanor or felony, depending on the
These two laws, taken together, should provide an effective deter-
rent to the illegal solicitation of contributions and should signifi-
cantly strengthen the ability of the executive branch in dealing with
this problem.
The Nursing Home Reform Act prohibits unfair business prac-
tices, provides for a rating system based on quality of care standards
and reimbursement system which partially take such ratings into
account and serves to safeguard patients' rights.
Other new provisions of the law include:
(1) A requirement that a 90-day notice must be given in order
to allow adequate time to arrange for the transfer of patients.
Further that proper transfer is a responsibility of the Depart-
ment of Health and Rehabilitative Services.
(2) A provision for at least one unannounced inspection of
each nursing home annually.
(3) The public availability of records and reports of nursing
home inspections.
(4) The promulgation of standards for the quality of care in
nursing homes is mandated.
(5) A system of classifying inspection deficiencies to allow for
quick recognition and understanding of the severity of a [nurs-
ing home] deficiency.
(6) The adoption, by the nursing home, of a public statement
guaranteeing assurances for each patient of: Civil and religious
liberties; adequate and appropriate health care; the right to
present grievances; the right to manage his or her own affairs
both financial and private; freedom from mental and physical
abuse and unnecessary restraints; and the right to be informed
of his or her medical condition and proposed treatment.
(7) Practitioners who have expanded their skill and knowl-
edge through the HRS-developed educational programs.

The array of witnesses who offered explanations for the situation
concerning the financial situation that many nursing homes are in,
did not attempt to really justify the practice of coercing donations
from recipients as their relatives.
Several nursing home administrators were 9!lned to testify, includ-
ing administrators from Greynolds Nursing Home and Royal Glades
Nursing home. Representatives from these institutions did not appear
at the hearings.



Mr. Plissner characterized himself as a "liaison" between senior
citizens and local nur.sinr homes.
Mr. Plissner argued that ilie. primary reason that nursing homes
are in a bad financial situation is because of the Government,--State,
couit" and Federal. Mr. Plissiiers statement charged that the
country's allotment for patlionts was far too low.
-Mr. 'l'issner also argued that if funds for the nursing were in-
cnased then so would the quality of care for patients. Mr. Plissner
contended that present. payments are not "realistic."

Mr. Schneider contended that rigid inflexibility by the State did
not. allow nursing homes to build in increased cost, a situation which
led some nursing homes to be placed in such a bad financial condi-
tion that some kind of donation is necessary for their survival.
Mr. Schneider also told tlie subcommittee:
.1Mr. S('1lNIAiD:R. As I see it from the above on the one hand the
nursiTig homes are forced to operate under a fixed income and actu-
ally on the other hand the nursing homes are told by the powers that
be, "I da re you to."
The subject of donations is humiliating and demeaning to me.
The basis for an admission to a nursing home should never be a
donation. And if it is in effect and you want it to be eliminated, the
(oMly way to do that, in my opinion, is for the powers that be to pro-
diue sudllicienit funds so that nursing homes can operate with a fair
It is also to be understood that our nursing homes are not tax
exempt. There is an awful lot of money that was invested.
If one would invest a million dollars in an enterprise he would
expect a fziir return. Why not the same fair return for nursing homes
In actitality a nursing home is a business. It has to pay salaries,
taxe. et cetera, and it must have a fair rate of return, fair rate of
income in order to result in a fair rate of return.
When steel prices go up car manufacturers raise the cost of their
When inflation lhit-,. our costs. go up and our nursingi home costs
co up. Why shouldn't nursing lihomes renegotiate to cover the
I know that the government at all levels talks about our senior
citizen.S. We have to take care of them, et cetera, et cetera, et cetera.
It is rhetoric.
But without the correct amount of funds it will always remain
rhetoric. That is the extent of my statement.
Oh, yes. one more thing, sir.
In tilis State a nursing home is paid $630 a month for a skilled
resident. That equals to the magnificent sum of only $21 a d(lay. If a
patient is classified as intermediate it is $560 a month with a daily
rate of $18.66.
And the lowest level on our intermediate care is $500 a month which
is n daily riAtc of :16.66. Now, we have physicians. We have regis-
tere'(l nurses. We have LPN's. We have aides and orderlies, the
dietary department.

The going rate for na private room in a hospital is $80, $90, $100 a
day and the Government says nothing.
Why doesn't the Government think a little more about nursing homes
in this regard?
Senator CmILES. I think the point that you made is, as I said earlier,
there are not sufficient funds for the daily care and there needs to be a
better way of gaging that against what costs are, is very valid.
Mr. SCH.NYMER. That is right, Senator.
Senator CHILES. Agreeing with that, I think we still have a problem
here and when we require someone that is putting a relative into a
nursing home and the Federal Government requires them to sign that
form, this is the only payment that is going to be made and your nurs-
ing home, as I understand it, all of them are not required to take
medicaid patients.
You could elect not to take any medicaid patients.
When you sign up under the program you do so sort of on your own
free will as a private institution.

Mr. Harris is the current president of the Florida Nursing Home
Association and administrator of the Florida Manor Nursing Home
in Orlando. Mr. Harris has served as a special liaison between the nurs-
ing homes and the State legislature and has attempted to acquaint the
legislature on nursing home problems.
Mr. HARRIs. I also have, for the last 5 years, been a member of the
Medicaid Advisory Committee to the State of Florida.
it's now been reorganized as a medicaid subcouncil. So, I have sat
with all the people that have made all the decisions in the last 5 years
reLa.rding medicaid.
I, too, have been to all the meetings that Senator Graham held and we
are very appreciative of his bill this year that set up alternatives in
January 1975 and I have enclosed it in your packet here.
We recommended all the things that you did include in his bill
in 1976.
The medicaid program in Florida has been in trouble from the time
it started in 1970. We have had a divided responsibility: The health
department setting rules as to staffing, facilities, et cetera, and the
Division of Family Services setting the rate of pay and doing the uti-
lization reviews.
It has been difficult in some facilities for the health department to
enforce its rules as strictly as they would like because of the very low
payments that the Florida Governors and the legislators provided.
Of the many problems facing nursing homes, among the most
difficult are:
(1) The failure of the Florida Division of Family Service to
propose more than $300 per month per patient for medicaid. Mr.
Harris contended that upward of $500 per month is needed to
provide adequate care.
(2) Stringent rules on staffing, buildings, et cetera, by the De-
partment of Health and Rehabilitative Services have hampered
nursing homes.
(3) The lack of coordination between the Division of Family
Services and the Department of Health, in that one raises stand-

yards for patients while the other does not recommend a corre-
.)spoIding raise in payment.
(4) The new rules for reclassification of patients could be even
more costly than t lie present system.
Mr. Harris also maintained that the system of having "contribu-
tions" was not adverse or wrong but hlie did agree that if those contribu-
t ions were "coerced" then that would be "wrong." Mr. Harris, however,
did defend the systems of collecting contributions as "needed."
Thle following exchange also took place between Senator Chiles and
Mr. Harris.
Senator CIIILE'S. Has the association taken any actions either by
resolution or inve-t igat ion involving the involuntary donation scheme?
Mr. J.ARIms. We have written letters to all of our association mem-
bers asking that they not. There is no way that I could tell a nursing
home who is all welfare and they happen to be in the Miami area
with a .TO0-a-mmoitl cost and they are getting $630 a month and say,
"Look. you shouldn't do this kind of thing down here."
Of course, the other thing we have to remember is that a lot of
times people go into a nrsing(r home and offer-I have seen this happen
in our facilities-many nursing homes don't take intermediate one, and
they will come over to ne, to our facility, and ask me to take in that
Mr. Spanelli is administrator of North Miami Convalescent Home
in north Miami and president of the Dade County Nursing Home
Mr. Spanelli testified:
Mr. SPANII.T. I think whatever had to be said was said very elo-
quently by our State president, Dr. Harris, Arthur Harris.
It seems perfectly clear that this problem of donations is not the
donations per se, but the method in which tlhe donation is generated,
and we hope that we can contact our various members of our associa-
tion and tell them if they were going to solicit donations it is not a
condition for adinii-ion oir a condition for continued stay.
This is the advice that we give to the members of our association.
We hope they heed tlhe advice and follow the instructions.
Following a question by Senator Chiles regarding the impact of the
local association. Mr. Spanelli stated:
Mr. SPANELLI. To begin with, the only homes that we have any
jurisdiction over aric those homes that belong to the association.
When it comes to the attention of any member then it is his re-
spojisibility to report it to the State association who in turn contacts
the director of the peer review committee who in turn contacts the
member's home and requests that he or she permit the peer review
committee to come in and investigate families.
The thrust of the medicaid program remains laudable. Nursing
homes, for the most part, have done a commendable job throughout
the State of Florida.

The subcommittee investigators were able to establish a definite
pattern among some nursing homes to exploit situations where families
were taken advantage of and definitely forced to make donations to
the nursing home.
The argument that medicaid reimbursement are too low for densely
populated metropolitan areas seems to have some validity. However.
the overriding factor remains: Donations should be voluntary.
The subcommittee recognizes the fact that many families simply
cannot afford to assist with cost for client care. When faced with an
arbitrary figure of $150 per month, the family is unable to cope and
now must worry about the quality of care their loved ones will receive
in the institution.
Until adequate community facilities and programs are developed
to allow for a sharp decrease in patients in nursing homes, it is im-
portant that proper enforcement agencies vigorously prosecute illegal
or fraudulent acts designed to force payments from clients and

The subcommittee recognizes the problems that many State agencies
have maintaining adequate staff to properly "oversee" nursing home
operations and properly investigate alleged abuses. However, in view
of recent disclosures in the medicaid program, fraud investigation
should be of the highest priority possible in order to insure public
trust in the program.

Investigative techniques to ascertain if illegal donations have been
made should involve personal interviews from as many medicaid
patients and their families as possible.

State department having supervisory responsibility over nursing
homes should adequately publicize the fact that all donations must be
State departments having certification responsibility should move
vigorously to penalize those institutions which do not abide by the
State-approved contracts. Where illegalities have occurred the proper
law enforcement officials should promptly seek legal action.

States should move to develop alternatives to institutional care, to
include home health services, multipurpose senior center programs,
senior day-care programs, et cetera.







CLEARWATER, FLA., Sept. 1, 1976.
2107 New Senate Office Building,
Washington, D.C.
DEAR SENATOR CHILES: There has been a lot in the papers about the awful
conditions that exists in the Medicare and Medicaid programs. What is pub-
lished and actually exists is really terrible. The paper does not make it half
as bad as it is. The Doctors, drug stores fnd nursing homes seem to be in this
thing together. The Doctors will not take a patient unless you have been using
him all of your life and when they do take a patient their charges are so high
that a normal retired person cannot pay the bill. Social Security sets a fee for
the doctor which they say is normal and when you send in this bill to social
security they deduct all over normal charges and then only pay 80% of what is
left. If you have a bad illness you cannot live long enough to pay the bills. We
need some kind of socialized medicine where the Doctors are paid a salary
and all of the nursing homes under the state or federal government and strictly
My Mother-in-law is in a nursing home now and I know what I am talking
about. My wife and I have bad hearts and cannot keep our mother in our home
therefore we have had the hastle with the nursing home, the Doctor and the
drugs that we are charged with that were never used. My wife called 35 doctors
before she could get a Doctor to take her mother and finally had to take a
Doctor who wasn't allowed to practice in the local hospital because he was not
on their staff.
I cannot begin to write you all the things that exist that are unjust and are
not right but I felt that you should know that the investigation that has been
going on is not half as bad as it is and I hope that you will do all in your power
to get something done about this injustice.
I am enclosing a small bill that Medicare stated that the Doctor overcharged
and they only paid 80% of what they termed a normal fee. I could send you a
whole load of such bills but this illustrates what I am talking about so far as
the Doctor charges are concerned.
I would appreciate anything you can do to get this medical system changed.
Sincerely yours,

ST. PETERSBURG, FLA., September 7,1976.
U.S. Senate,
Washington, D.C.
DEAR SENATOR: I certainly am against fraud in the Medicaid program. I am
also against Medicaid fraud against people by Medicaid.
According to the statement in the St. Petersburg Times of September 5, 1976,
it states "for the first visit to a doctor is limited to $15.00, therefore the patient
pays the rest of the bill. As an example the enclosed bill shows where the doctor
charged $25.00 for initial examination and lab work of complete urinalysis,
medicare paid the 80%. of initial examination of $15.00 but nothing for the
lab work, so the $10.00 for the lab work came out of the patients pocket. Now
the patient could have went to the hospital and had the lab work done and
the hospital submit the bill. I can assure you that it would have been more then
$10.00, but the patient would have been reimbursed 80% of the bill, but because
the doctor done the lab work the patient had to pay the $10.00 out of his
The law provides that "Diagnostic test including X-Ray and laboratory test
are covered provided they are done in an approved laboratory or one operated
by a physician or hospital, or for a hospital outpatient". So how can there be
a limit be placed on lab work?
So why was it the lab work was not paid for by medicare in this case?
As I said before, I do not believe in fraud against medicaid, nor do I believe
in the medicaid program committing the same acts of fraud against the people


who can III afford to pay the additional expense they have to pay when they go
to a doctors office because medicaid fails to read the doctors bill.
I believe this should be corrected also.
The doctors and hospitals are ripping off medicare, and medicare is ripping
off the patients who is paying for the medicare insurance. It Is time that the
patient is given the full benefit of a doctors bill when it is submitted to medicaid.
Respectfully yours,
[From St Petersburg Times, June 5, 1976]
(By Martin Crutsinger)
TALLAHASSEE.-Florida officials say that fraud exists in the state's Medicaid
program, but stricter regulations and better enforcement have kept abuses from
approaching the level reported nationally.
Officials of the Department of Health and Rehabilitative Services (URS) said
that Florida's limits on the amount of money that can be spent are more con-
servative than elsewhere, and the state keeps closer watch on doctors.
"Any system is going to have fraud," HRS Secretary William Page said. "But
we are in a much better shape to counteract it."
A U.S. Senate subcommittee last week disclosed widespread fraud and poor
treatment at Medicaid "mills" in New York City and other places.
Subcommittee investigators reported that doctors often ordered unneeded
laboratory tests to boost their own payments and prescribed unneeded medica-
tions to get kickbldacks from pharmacies.
Several doctors and officials of laboratories in Florida have been convicted
recently of fraud in connection with Medicaid payments. Representatives of
senior citizen and welfare groups also have charged that clinics in Miami Beach
and elsewhere are taking unfair advantage of the Medicaid system.
But Page and Charles IIHall, Florida director of the Medicaid program, said
that unlike New York, Florida has a $50-per-patient limit on the amount of
laboratory work that can be done each year and a $20-a-month limit on pharmacy
The Florida program also limits payments for doctor's visits to $15 for the
first time and $10 thereafter.
"The Florida Medicaid program is a fairly conservative program," Page said.
'"We don't provide everything that everybody else provides, which means we don't
have the possibility of excess of other states."
Even with the limits. Florida's Medicaid program is projected to cost $246-
million during the current year. The federal government picks up 57 per cent of
the tab and the state the rest.
Following the reports of abuses nationally, House HRS Committee Chairman
Elaine Gordon said her committee will conduct its own investigation to see
whether Florida is doing all it can to halt fraud.
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/7 No. 11289


Fort Lauderdale, Fla., Decemnber 8, 1975.
Re: Eng. No. 76-20, Royal Glades Convalescent Home, patient's name: Isador
North Miami Beach, Fla.
Dear Ms. BALL: We are currently involved in the audit of Royal Glades Con-
valescent Home, North Miami Beach, Florida.
In connection with our audit would you furnish our office with the dates and
amounts of monies paid to Royal Glades Convalescent Home?
Please describe the manner you were approached by indicating whether your
contribution was: (a) Voluntary, (b) Coerced, (c) Condition of admission, or
(d) Continued residence for patient.
A self-addressed envelope is enclosed for your convenience.
Your reply will be held in strict confidence.
Internal Audit Section.
DECEMBEB 12, 1975.
Re: Eng. No. 76-20, Royal Glades Convalescent Home, Patient's name: Isador
Shankin, response to your letter dated December 8, 1975.
Internal Audit Section,
Department of Health a(d Rehabilitative Services.
DEAR SIR: On May 1, 1974 my father was admitted as a private patient to Royal
Glades at the rate of $f50 per month because at the time I was told by the Miami
office of HRS that a Medicaid recipient could only have $600 in assets, and at the
time he had $2,700. In July 1974 when I called HRS to notify them that he had
only $500 left I was told that as of July 1974 a recipient could have $1,500 in
assets. Having already pail $650 for July I was informed that I could apply for
Medic(:iid as of August 1974 after I made arrangements with Royal Glades to
accept him. The "arrangements" were to agree to pay $175 monthly. Please place
this in any of the categories you see fit, because I honestly don't know how to
describe it except to say that it was not voluntary.
As of 8/1/74 Florida Medicaid Vendor payment was $392.00 plus my father's
S.S. of $159 plus $175 came to $725. Rates for private patients were $650 as I had
already paid that. I have just learned that including $171 from S.S., Florida Med-
icaid lays $600 as of 7/1/75 added to $175 brings this amount to $775. Could you
I)please tell me why Medicaid and I should be paying more than private patient fees
which are $750 as of 7/1/75. We get no spe:Jal services. I visit every day and do
all of my father's personal laundry.
Although my $175 payment is not deductible from my Federal Income Tax, it
is a requirement for my father's being there, and I really would like to be able
to understand why.
I am available to give details of service, etc. if you want them and I do appre-
ciate that someone is interested in inquiring. My phone # is 651-7053.
The attached is the list of dates and payments to Royal Glades as you

Date: Payments
May 1, 1974---------------------------------------------- $(;50. 00
June 1, 1974----------------------------------------------- 6. 30
July 1, 1974------------------------------------------- 5------53. 75
August 1, 1974---------------------------------------------- 175. 00
September 1, 1974------------------------------------------- 175. 00
October 1, 1974 ...... ------------------------ 175.00
November 1, 1974------------------------------------------- 175.00
December 1, 1974-------------------------------------------- 175. 00
January 1, 1975--------------------------------------------- 175.00
February 1, 1975-------------------------------------------- 175. 00
March 1, 1975---------------------------------------------- 175. )0
April 1, 1975----------------------------------------------- 175. 00


Date: Paymentsa
May 1, 1975 -- ----------------__- 175.00
June 1, 1975 --------....------ 175.00
July 1, 1975-- - - - - - - - - - - - --_ 175.00
August 1, 1975_ ---------------- 175.00
September 1, 19)75 .-- __ _ __ _- _ _ __ _ _-_ 175.00
October 1, 19715_ --------------- 175.00
November 1, 11975__ -------------175.00
December 1, 1975 --------..------- 175. 00

(Prepared by Douglas F. Whitney, staff attorney, Aug. 13, 1976, department of
health and rehabilitative services)
Prior to 1976, the Department had received scattered complaints about con-
tributions being required of relatives of Medicaid patients in nursing homes.
These complaints were investigated at the local administrative level; however,
it was determined at the upper administrative level that the investigations did
not show sufficient evidence under the existing laws to take any affirmative
Towards the end of 1975 and the first part of 1976, the complaints became
more numerous and the Department realized a difficult problem was in existence.
The Secretary of the Department responded by mandating a more thorough
Investigation into the entire problem. Initial analysis of the complaints deter-
mined that the primary problem areas were the Northwest or "Panhandle" part
of the State and the lower Southeast coastal area from Palm Beach County
through Dade County.
The legal staff of the Department was given the lead to utilize Department
resources in investigating and determining what action was available to the
Department as a result of the investigations. The investigations commenced and
are currently being conducted from a two-phase aspect:
First, thle financial determination was to be developed through a special task
force audit group from the Internal Audit staff of the Department.
Secondly, investigation was to be conducted by developing witness informa-
tion from parties being allegedly required to make contributions to nursing
homes on behalf of relatives who are Medicaid patients in the nursing homes.
As to the first aspect above stated, the audits were commenced and are con-
tinuing of various nursing homes in the above referred to geographical areas
of the State. Although only one audit for one fiscal year on one nursing home
has been finalized into completed report form, preliminary information from
other audits that have been completed or are in process have substantiated the
financial aspect of the contribution problem as well as related problems involv-
ing possible overcharging for drugs and other services that are included in cost
of care.
As to the second aspect of investigation, considerable difficulty has been
encountered in the willingness of contributors to come forward for fear that
their action may adversely affect the care or status of their relative in the
nursing home. Due to staff limitations and available time. this aspect of the
problem is progressing at a lesser rate than the audit aspect. It should be pointed
out that a final audit report, from the time of commencement until the time
the report is finalized, generally takes approximately three to five months which
is due primarily to auditing standards and the necessity of sufficient review
to produce an accurate report.

Both through reports to the Department by individuals and through audit
procedures, it has been determined that the practice of eliciting contributions
from relatives of Medicaid patients is widespread, and that the requests or
demands for these contributions are generally oral and very infrequently is


there any written documentation to evidence the practice. The sit:-ttion ari'-..
in two general factual situations:
First, a relative determines that hlie or she (.can no longer care in the home for
a Medic: id eligible client and seeks to place this client in a nursing home nider
Medicaid. A given nursing home will then require of the relative a contribution
to the nursing home as a condition of admission.
Se,.,ndly, a person will be placed in a nursihrg home from a hospital und(ler
Medicare and when the Medic;ire expires and prior to the nursing home being
willing to sign a Medicaid agreement for the patient with the I)epartillment,
they will require the relative to agree to jmi;ae a contribution to the nii'-iig
home. Reports have indicated that the contributions range from $50.00 to as
high as .'::';50.00 and -,,iii to be primarily Iased upon the relative's ability to coln-
tribute. The most difficult aspect of this situation is where a husband and wife
maintain their primary support from Social Security Income and one of the
parties is unable to be cared for at home and must be placed in a nursing home
and is further eligible for Medicaid. The nursing home still requires an ,'e-
In,!it. from the spouse to pay a contribution to admit the patient.

The Departinmet feels that it has, after developing sufficient evidentiary in-
formation, several alternative recourses. It may institute a legal action for
breach of contract against a nursing home. It may determine that the nursing
home has breached regulations sufficient to assess an administrative fine against
the nursing home. It may seek, through the appropriate branch of government,
a revocation or a disciplinary action against the nursing home administrator's
license. It may forward any evidentiary matter of possible criiinii:il activities to
the State Attorney's Office for further action. It may determine that sufficient
evidence exists to seek revocation of the nursing home license.

As previously stated, with staff limitations, the Delipartment is continuing its
investigatory aspect and anticipates within two to four months of having suf-
ficient evidentiary information to take one or more of the above described actions
against several nursing h4,nres in the State. The main concern of the Delpalrt-
ment is not to place a nursing home out of business as the service is needed for
the recipients or clients, but the action that may be determined to be taken is
to require the nursing home to comply with both State and Federal statutory
and regulatory requirements in this situation.


The Legislature of the State of Florida in its 1976 Session made considerable
revisions in that part of its laws relative to that which is commonly known as
"Medicalid Fraud" and particularly in dealing with the contribution aspect. This
law, with certain qualifications, in effect causes contributions made as a condi-
tion of admission or continued care of a Medicaid client or patient to be des-
ignated as crimes, both misdemeanors and felonies, depending upon the amounts
of the contributions. The law becomes effective October 1, 1976. The Department
feels that this law will strengthen its position in being able to effectuate action
in dealing with this problem. The Legislature further passed additional laws
directly relating to this problem which would affect the licensiure and Medicaid
portions relative to nursing homes and effectively strength the Department's

North Miami Beach, Fla., December 14, 1974.
Re: Ma ry Kaufman.
DEAR MR. PORRIS: We have reviewed Mary Kaufman's account and wish to
advise you ihat you owe the supplementation of $150.00 due us 2-16-74 whereby
you only paid us the social security portion and had omitted the $150.00 due us.
Also, there are accumulating drug charges that aren't covered under the medi-
caid program which are the non compensable drugs and they total $117.82 due

h II :,' I.,lit I,, d, Lt,6. TlI.erI.vfre, %% '\ve o ld :111,1 e iaite you r clit'-ck for $150.00O
>llI s IT7.' 2 $---2(;7..S2, total.
.\ I-'. \x,1 1 ill lhave to iiiider..tanld illr p.Isitimn in regard to thie imnllnthly pledge
diI I'll 'r ..vlo .(i( t: aclh litith. \llich is very nei e-sa:ry ,; our costs are extremely
iJEJh. 'lieref,'re, there is the 'M(AHI.t siipleeniit iation idue f)r PiY'eiuber and
*t, \\,llld apl1rct'inl e %yu itr ., e':tin in ,on tiinuig this pledge as long aits Mary
Kl lifili:ll is ill 4)11" fatiliiVy.
\'e r1" ret this i-lli ii,,n bI' t wPe hIIvel't ainy choi-e and Imust ask that you
ii oteltr arr;in eiiieiits tI. ~:av' Ma:try K;aufl'aiiiiin tranisferred out froiii our
f.1, ility if you ;ire naiiililh to 'T'riv,; ilJ' n. l ilildoi-':li m]$ \\e roll'i rii
DR. ALVIN ST[IN, Administrator.

Co(l Ir:iVI-:, A.IGu.T.r 17, 1976, MIAMI, FLA.

Tid;iy, the Goveranment Olperatiin-; Subcommittee on Federal Spending
Pr';iw-.: 1,'i-i.s an inquiry into the problems found in the Medicaid system.
T ii s It':iiii: 1:i(l iy acltially cunil miiLl's considerations that the subcommittee
lI-L,:I ": N i Ii, a stlIy of certr in lproldiiis in the Med(i-are Iirogram. Let there be
ill, c,-iifiii,'n Wilit where I stand1 ,n the issue of high (jiuality health care.
Withoti question, I am interested in expanding on those positive features of
our p'l',,ti lIi:ilth care delivery systeinm aind in making the system work, par-
ticfl:lirly for the poor anil eld,.rly. IIoever, there is deepl concern in Congress
that thle system is iit \working as Congress intended.
There is concern that \vith many organizations, the dedication is not to the
1al ient or the client, but rather to gaining a profit.
Ci .ic'ioil c,,,imil toes in both Housets of Congress have spent a lot of time
inve-tigating abuses and fraud in the medical programs but new revelations
I-'riiw up daily. So, I think the concern of Congress is altogether proper.
There is concern by Congress that, in providing for variety in Medicaid ad-
ministration, we have also provided for a general hodge-podge of individual state
prIo),rl in operation.
I re,'ounize, indeed, I have fought for the need for the states to have some
fl' ixihility in ;i!niiiiiistration and I hi pe states caan maintain some flexible aspects
h',,;, isl I do not believe that the solutions to all problems can be found in
Washsliiii.ton. I guess it boils down to the fact that we have heard so much about
the problems in Medicaid and Medicare that we have finally started to listen and
be concerned.
We hear about the long delays that persons filing for reimbursement have to
suffer. We hear about the incredible complex Medicaid forms that have to be
killed out by patients seeking care. We hear that patients' families are being
coerced into making so-called "donations" to nursing homes as a requirement
for their loved ones being accepted.
We lh.;ir all of this and we say that clear violation of the Social Security law
,a.nlot be tolerated and violators must be firmly dealt with if public credibility
for the inedicaid program is to be maintained.
I am aware that there are countless nursin. homes in the State (of Florida
that are doing a fine job of providing quality care to the elderly and they are
t,' >, i '.<**,iii,' iiii'dl.
Ini fo, ii-in, on the problems, we do not ignore the contributions. I have been
told that iiilllay health care p'rovid(ers do not want to acc'ep)t Me(dicaid assign-
ment because the rates are so unusually low-approximately 40 percent of the
prevailing rate. This fact alone makes it all the more remarkable that valid
r(intributions are made by many nursing homes.
Federal and State taxpayers are shelling out some $38 billion in fiscal 1977
for health programs, and I believe that the American people are willing to sup-
port these programs as long as they believe the programs are being administered
efficiently, effectively, and compassionately.


The thrust of the matter goes beyond the dollars involved, although that's a
valid concern but, rather, it goes right to the point that our health delivery
system involves people, not cold statistics.
Florida has over 150,000 individuals involved in the Medicaid program and I
am told by Medicaid officials that the number will go even higher next
Every client, every taxpayer, every family, has the right to expect high quality
care and effective enforcement of the proper laws.
Every example of fraud and abuse that occurs seriously comproni-es the
quality and efficiency of health services for the poor and elderly.
We welcome the witnesses today who will relate the problems as they know

The Florida Nursing Home Association repre-entative- discussed the pay-
ments for services with the Lieutenant Governor and Mr. Cressie in December
1975. The same day we met with Secretary Page and some fifteen of his Akidts
and discussed reimbursement for the three levels of care.
We presented cost estimates at both meetings which we felt, if put into effect
at once (January 1, 1976) concurrent with regulations for three levels of care,
would be acceptable to the nursing homes of Florida. Our figures and our com-
ments were to increase the payments for all skilled care patient., $'30.00 Ier
month with a cap of $630.00 and $567.00 for intermediate I.
We stated at that time that we would try to help the State by reducing staff
for the ICF #1 patients to try to offset part of the reduction in payments. It
must be understood that the skilled patient and the patients to be designated as
ICF #1 are all the same patients that the skilled care cost reports covered.
The reclassification of patients from skilled to ICF continued on the two
revi-ed (November 1975) levels of care, Skilled and Intermediate, until April
with no official mention when there would be any c-hange in payments.
When the State notified patient- and their respoi.-ible pi,-ties that their status
had been uhanad from skilled to intermediate, they imm.iliately contacted the
nursing honims to see what this meant.
Becau-e we had no change in regulations, the only thing we could do was
quote the then existing regulations to them. And that while their patient had
bF-LI 1 of 40 Patients taken care of by a nurse, he would now be 1 of 120 patients
taken care of by one nurse-while they now were 1 to 10 patients taken care of
by one Aide, they would now be 1 of 20 pal ients taken care of by that same Aide.
Naturally they knew as well as we did that this would be impossible, so a
gr..'at many appealed the decision on the basis that their !-,tient could not be
eared for in an intermediate facility. The nursing home could not care for these
patients for the $100.00 per month reduction in reimbursement and maintain the
same :.taft.
We advised the of HIRS in March that if we went to the three levels
of care and paid for tl(ie2j as we liad suggested, we felt most of the app-eals
would be withdrawn becau-e then the staff would not have to be reduced for
the ICF #1 so drastically and we felt the pati,-nts' representatives would be
better -ati:-fied.
In April the Secretary of HRS issued regulations implementing three levels
of care with i.ayients of $030.00, $560.00 and $500.00 per month.
When his staff started to implement this regulation they told us that they
were not going to increase any payment to any nursing home that did not have a
cost report above $600.00 per month. What they philnniiil was to pay the .-;!ie
as the cost report for skilled and pay 88.9% of the cost ri',port for ICF :4. 1n
other words, they would pay the same for skilled care while reducing IOF #1
far below what the nursing home could p'.iloly irn.k.! up with a staff redim- :on.
If a facility had a sMilled ra-te be',ause of c 7-1 r.1-7 rt of $':!0.00 then they
would re,.ive only $533.00 per month for ICF #1 or .( 7.0() per m..::th s.
The most the facility could make up with redur.e :>'f would be 1' '.00 per ,ith
and if it was a small facility they could not save anything.
We immediately pointed out to various members of the Secretary's staff that
this would make it impossible for the facilities to provide ICF #1 care -.i:ud


iliit lIt. f:iniw iii" \v,' ild ine t to tll tih t Ip tit' t.- rcs'lt.I siiile paliii.s (if tIlies.
t';.'.-; W t. l. n tI- ld l i'.iii tliit \v'1,, it' tilt- Staik ll irs-led t liii.- |l:I1 (of ruiz -
H,,r.-t;ic. it, pi a i vi l ti jl ', % ,li tI I\ d 10t 1,,1y ,V iillllitli ;ip|K'1ling thl rtf l .ssilicailioi ,. su
1 I,%- . \'- f. ,.; i .:it it ', i l ) i i;" :,.- ; S ':i 'e i i l. i[. ] .I.[ 11d d v. ,4S-30.1 11'1 Ill-' i llp il t1I to, l 'a l
S-' : ,.'',r1t f 'r -l.illi,. t1 i1ii 1,i%. tiltu ,S.',.:1' f tIhlat ligilrcl fur I fml 1CP .
.\ i "ler i' : ,'] it \V* li: \, il Ili I l i'ir i1 ;, 1 tif r lt'i -i]tiir-'til iit i- th ei' \ ; iy ) %tyn il-its
::re tj '.nr,',i \]n''i llr" f:: ii iit'.-. li.ive i .i;l trti i i it c:it i slfcti4a( o(f di..tiiiict
l,.t st.^t
lTh* i:, i il ,,,w\ in i ll-% : If tlh i ;l\-r:1 ,' (-lst (f ri 'rc ill :I faluility is .$;( HI.(X)
1" l" Ii .'.1iin 1]f i I I '( -I rF=tv 'i'i'- (ivly S.'-'.3 (X). If tilt- f;'ility .li;! IM) t'tal piatienilts
,. ,,..i '* ,, r ,-:,,,. r,',' ,, 1 ): ..*n 1 1h \\,(>'.!10 I,, S .;11.1 0 1. 'l'l c S ;;ri ote -:I.vs llity w ill l i;;y
thl" c( .:!," up tt r ". ,I t l lut this i- 11,11' t r-i .. If :`1 ( ,.4 ti,.t'< \\1..'c i..killed .11,i l
.511 I(P F I, t11c rteiluIii I -veiiaint w'nlul ie ;I}>(\'ilI .(H)=:;),(fi -I-."{ 8X)(o= -.t;,"0(IJ.o
;Ir ; t'ttil ,f 15..I, i ;. i;-,i5 I ii t \\,,!l l :ivc thil f:i(ili]y ].(lNI rt liy s:i.:,.v( I.(S.
If 111' I *',": r i', iI't i- an iv ,Vr:il:l iif tJil' cu',-t foi c-;ire ,,f skillh.l ai, d inttrine(li:ite
I :;tie ,ts tln-., a f, il:t m \ t. t l ( \v ,,i'ktd liltt ,ill tl;,- ]I' -4-''ill;l;r ,f I ;',lf <-l~ i iil-ia-
tiun t,) rji-e til. r.Iate f;r. .-killeil c (;Ire ;l',)\ tIli avc ,r e(, irriveti at l)y tile
t',,i1 ,. sU di .i '.l by t1'1 ;i i 1 i 4 of 4-.Iare ivii1.
\+e f .1* tl!'- wv'.lil Ii, i -t.h ir thi:iia (litinet liarts fur three repisnns:
1 ) If we T!-v ,h1tinct li, tt. for ,.ela i level, thio!i n, i lthier tyit-s of paticfnt,'
W:11 1 Ic ,' id in thiit p)Lr1t. 'I'lli- would iicrv'at, tlie ninibher of vaicant bIed, in
i. ,ii facil ity ltct'ni.- we w\,uld have to wait for the correctly classified patient
lhef,:.. \(. (.lmid ladiiait. Tiis would d niot lie true in a facility with dual ccrtii(-a-
ti,,z :na l ,.,,-i-mii lilmhi of pi tients.
(2) We alsu feel it nimay give us a problem with Title VI because we would
lie seroeatini. the Medicaid patients in one part that would come to be called
tlhe Welfare Wing. Our private paying patients would all pay the extra rate
to lie in the better wing.
(3) If distinct parts were set up the cost to the nursing home and the State
would lie greater. The facility would have to keep the costs separate in each
se.tiiin thus requiring two or three sets of books and the added staff. It would
also c.,st the State much more to audit because each cost area would be like
a separate nursing home.


Contributor's Letter

(Approved by Division of Family Services)
(Division of Family Services-Local Office)
(Name of Contributor)
It is my intention to make a regular cash contribution to (name of nursing
hume) Nwhich is not intended to be used by the
nursing home to cover or supplement expenses relative to room. board, laundry
related to nursing care, and professional nursing service for patient (name of
medicaid patient)
It is ijy understanding that the State's "recognized cost of care" is considered
payment in full for these services and any attempt to otherwise cover these
expiensus directly or indirectly for a specific patient could be considered a
fraud lulent act.

Signature of Contributor
DF'S Olperation, LTetter 2011, dated Deceminher 2, 1971. (as amended by letter
of D'c.venler 17, 1971).

To: Region directors.
Fromi : E. Douglas Endsley, director.
Subject: Contributions to nursing home.1s by relatives, friends, organizations,
In order to clarify the Division's policy relative to regular financial contribu-
tions to nursing homes, the following guidelines are to be applied, effective
Regular financial contributions to a nursing home, mnde as a result of a
sluecific Medicaid patient living in the facility, will be considered ;.i, available
income to meet the agency's recognized cost of care of the individual unless
the contributor submits a written statement to the director of the appropriate
region of the Division of Family Services as follows:
To: ----------------------------------,---- region director.
(Division of Family Services-Local Office)
From: --------------------------------------------
It is my intention to make a regular c;.sh contribution to --------
(Nursing IHome)
which is not intended to be used by the nursing home to cover or supple-
ment exI)JI-,. relative to room. board lauildr'y related to nursing care, iand
professional nursing service for patient---- ---------------------
(Medicaid recipient)
since it is my understanding that the state's: reJogniized cost of c(;re or
actual cost whichever is less is considered pli:iyment in full for th,-,-
services and any attempt to otherwise cover these expenses for a spe(.ific
pa tient could be considered a fraudulent act.

(Signature of Contributor)
It is permissible for nursing homes to bill and receive payments from outside
sources for expenses not covered by the vendor payment such as oxygen. drugs
beyond the PM-1 authorization, etc. without regard so the agency's recog. ized(
cost ($350 skilled; $300 intermediate) so long as the total reimbursement
received by the nursing home in such instances does not exceed the nursing
home's actual cost, computed on the basis of Medicare standards. Such payments
would be expected to vary and be irregular, and therefore they usually would
not be considered a regular financial contribution, subject to the signed state-
ment above. However, if payment for these types of services are regular and
in the same amount, the above statement should be corrected by the con-
trilbutor. Items covered by the vendor payment are outlined on pages 5 and 6
of the information pamphlet for the nursing home program.
The above guidelines should be applied to all cases as they are originally
budgeted and routinely reviewed, or specially reviewed(l because of various
reasons such as a different previous policy interpretation, new information, or
alleged circumvention.
AUGUST 25, 1971.
Chii'f, Bureau of Mfcdi.l Serrirc.,, Division of Faniiy Service., Florida Dcprt-
meit of Healt (a md Rei'hbilita tirc Ser'rice, Jack..onville, Fla.
DEAR WIIG(;IIT: Thank you for your letter of Au:zust 20 and the draft of !he
proposed new policy regarding nursing home supplementation, which you enclod
with it.
Art Harris and Eli Subin h:ive studied this draft in the light of our recent
discussion in Jacksonville and I have also gone into the policy with Bob Russell.
All of us feel that basically we are on the right track. The policy. Ps drafted.
sounds good. In fact, there is only one change that we believe should be made in
It is our suggestion that the last part of the first sentence be reworded as
follows: ". . .$35.0 per month used for budgetary purpi)ses in a skilled nursin-'
home and the $300 per month used for budgetary purposes in an intermediate
care facility.
Since a "recognized of ,.ire" has not been determnied, as 4t:itcd in your
last paragraph, we feel that this phr-se, should be eliminated from thlie ,prw,',,'si.l
new policy, in favor of the phrase we sugg ested, or siine other phrase that prop-
erly describes the $350 and $300 figures.


ltli-.rm ise. the 1 draft is excellent. frin our pioint of view. TilThe second sentence
is tihe key, of c',urse, and the way it is written is exactly their way we had hoped
that it would be.
Wit ii vry best l)prsi innal regards. I runemain
I~rI;Il~ ';T L. R~O(,'..I;S.. J*T.'
DEAR NURSING HOME ADMINISTRATOR: By our letter of I)December 3. 1971 you
received a ciopy of Operations Letter No. 2011 regarding tlhe Division's policy
relative to contrilbutionsi(. In re zard to the ('ontriliu( Letter, a number of admiin-4trrator have poiniited lt a1i1 ina:cclltracy in tihe lnst
senlteice to the effect thlit the State Medicaid payment is payment in full. There-
f ire, we are changing the statement to read as follows: "It is imy understandingii
that the State'S estahlished 're(oJgnized (.cist (of 'are' oir .1n011tl ( ist whichever is
le.s,, is considered payment in full for these services and any attempt to other-
wis.e cover these expenses directly or indirectly for a specific patient would d be
cu'in-idered a fraudulent act."
Thank you f,,r calling thlis matter to our at tention.
Sincerely yours,
Chief, Bureau of Medical Services.


December 2, 1971.
To: Region director,:.
From : E. Douglas Endsley, director.
Subject : Contributions to nursing homes by relatives, friends, organizations, etc.
In order to clarify the Division's policy relative to regular financial contribu-
tions to nursing homes, the following guidelines are to be applied, effective
Reiul:ir financial contributions to a nur-siring home. made as a result of a specific
Medicaid patient living in the facility, will lie considered as available income
to meet the agency's recognized cost of care of thle individual unless the contrilbu-
tor submits a written statement to the director of the appropriate region of the
Division of Family Services as follows :

To: _-------------- ----
Division of Family Services (local office)
From : _..-----_ -_-- - - - - - --- - --- -
(contribu tor)
It is my intention to male a regular cash contribution to --_ ------
(nursing home)
--------------------------which is not intended to be used by the
nursing home to cover or supplement expenses relative to romi, board,
laundry related to nursing care, and irifessiri.nal nursing service for patient
-- ---------------------------------. It is Ily understanding that the
(Medicaid patient)
State Medieaid p);iym ent is considered payment in full for thise services and
any attempt to otherwise ove, these expenses directly or indirectly could be
considered a fraudulent act.
(signature of contributor)

It is pernik-ible for nur-inZ h iine-, to bill and receive paymnwnts from outside
sources for imedic:i expenses not covered by tihe vendor payment such as oxygen,
drugs t,,-y


nized cost ($.'50 skilled: SQ0 intermediate) so long as the total rim r.ent
received by the nur~iinr home in such instance doe- not exr-,, I the nursing
home's atual cost, computed on the ,asi. of Medicare sik anudards. Such payments
would be expected to vary and be irregular, and therefore they usually would
not be considered a regular financial contribution, subject to the statement above.
However, if payment for tho:ee types of services are regular and in the -.,.:
amount, the above statement should be completed by the contributor. lPems
covered by the vendor payment are outlined on ,ages 5 and 6 of the information
pamphlet for the nursing home program.
The above guidelines should be applied to all cases as they are originlIi1y
budgeted, routinely reviewed, or specially reviewed becau.-e of various r,--.I-ons
such as a different previous policy interpretation, new information, or alhK-gZ d

Orlando, Fla., July 6, 1976.
Secretary, Dcparthocnt of Health and Rdwbilitative Servicc.s, State of Florida,
Tall(Uhaa.xs C, Fla.
DEAR SECRETARY PAGE: The present method of reimbursement for the crst ot
care in a dual certified nursing home is to pay the average cost of care in the
facility for the skilled nursing care patient and reduce to 88.9 per cent of that
figure for intermediate care, level 1, patient, up to a cap of $630 per month for
the skilled nursing care patient and up to a cap of $560 per month for the inter-
mediate 1 patient.
Using this method, the facility would never be paid its cost, even though its
cost was below the cap.
Some method must be devised to determine the cost of these different levels of
care, so that the facility can meet the needs of the patient and operate within
the rules and regulations of the state and the federal government.
Realizing that the only difference in cost between skilled nursing care and
intermediate care is in nursing staffing, we have developed a plan, using the same
nursing staff factors which have been proplo-ed by the Department of Health and
Reh aLilitative Services.
To compute the nursing staff needed for a dual certified facility, the state will
use a weight of 1 (one) for each skilled nursing care patient; 0.8 (eight tenths)
for each intermediate care, level one, patient; and 0.5 (five tenths) for each
intermediate care, level two, patient.
When these factors are multiplied by the number of patients in each catmory
of care, we then come up with a revi-ed I:atient census to use with the skill-d
staffing regulations.
By using the same factors for nursing costs only, we then can determine as
close as possible the cost of nursing care for each level of care.
To illustrate this method, we have prepared and have attached to this letter
an example of how this would work in a 100-bed facility which has all Medicaid
Because of the caps which are built into the Florida Medicaid Pr,,:-im, this
facility still would not be rei1L1,'r-ed for its total cost, hit it would be leItter
off than it is under the present system, when its reimbursement would lbe more
than $50,000 below its cost for the year.
It will be very much appreciated if you and the aplrcrPriate .!ibers of your
staff will study the new method which we are proposing and the example of
its application which is attached to this letter. Any comnMnents or s.u -stions
which you or members of your staff have about this will be welcomed by ,is.
With very best personal regards, I remain.

ARTHUR H. IIAr.nris. Prc.ident.



1100 beds-93.41 percent
Col. 1 Co. 2 Col. 3 Col. 4 Col. 5
Revised percent
Nursing patient based on
Patient care census levels
census Percent factor col. I X3 of care
Skilled ....................................... 17,048 50 1.0 17,048 60.61
Intermediate I.................................. ----------------------------- 8,524 25 .8 6,819 24.24
Intermediate II................................. ----------------------------- 8,523 25 .5 4,262 15.15
Totals................................... ------------------------------34.095 ...----------------------......... 28, 129 100.00
Total Skilled Intermediate I Intermediate II
Apply percent in col. 5 to total nursing cost:
Percent .................................................. 60.61 24.24 15.15
Nursingcost........................... $222,436 $134,818 $53,918 $33,699
Apply percent in col. 2to all other costs:
Percent--------- -------------------------------------.................................................. 50 25 25
Other costs-------.------------------- $437,992 $218,996 $109,498 $109,498
Total.--.--..--------------.--......---------- $660.428 $353,814 $163,416 $143,197
Patent days...... -------------------------------- 31.0% 17,048 8,524 8,523
Cost per patient da, ---------------------------............................ $19.37 $20.75 $19.17 $16.80
Monthly rate .................................. $589 $631 $583 $511
Monthly rate based on caps.. ------------ ----------------------...--- $630 $560 $500
Percent --..............................-----------------------------------------....--....-------------- 88.9 79.3
Monthly rate by present method..--------.-------..........-----------------... $589 $523 $467
Total medicaid eimbursement based on present
method .. .................................. $697,745 $330,219 $146,613 $130,913
Reimbursed less than cost for year .....-...---....- $52,683 ------------.----------------------
If use cost would still be less than cost report,
$10.383 ......--------------------------------................................ $550,045 $353,235 $157,012 $140,203


Jl1'.mon rille, Flai., June 3, 1976.
DI-:.\t NVi:sING IHOM' AI).MINI.-TRATOR: Thle attaiclied (cii)y of the latest Depart-
i.:('int of I1WAlili and Relialilit;ative Services update to its Social and Economir
Serni'e-. Manilol 01tO covering I)efinitiEins anid Level of Care Criteria for use of
I)istrict Modil.-; Servi(es Units and their Medical and Utilization Review Teams,
is 1- %I.rt, slihared with y,,tii for y,,lr i terrest aind edifi4-atioln.
If \!i,'s is a Title XVIIl/Title XIX facility whlihe carries out its own Utiliza-
tioii Review f\ t' l-tiilis. we would sugest ti;lit this materiall be s,-hiared with your
I'tiliat~ioi Rpvi'\w Committee.
We lhope this material will lie of interest a .d I ite. Should tlire ie need for
any clarifi(. ati).ii ic.a-e aldviie.
Sinetrely yurs,
B1t'rcmi (Of .l d-ira ,S'rvirr'e.q,
Social an( d JEr n0om.ic Program Office.
At ; -lhiient.
APtIL 1, 1976.1
Suhjti (t : New I t i on ii-l ii-Appel)l)ni(dix A to chapter r 1100; pen and ink changes-
C(lai pter 1100, pages 3 through 7.
Thlis is an i(dL:te on the deliiit ivtns fir nursing home ..ire tlo be made an
Alppnldi: to 1('i.ipter 1100 of the Medic. :id Manzit l. Please delete by crossing out
all of PaI'zri:iph .5. through 5.5.2 in Pa es 3 thriughi 7 of ('halter 1100. Please
il.scri this Appendix to the end of Clial'ter 1100.
Ci1[..\I.ES HALL,
Staff Dimrco'r,
,,,iuJ and Economic Sc'i,' Prfgrain Office.
At Iae(-lioiit.

1 The effective date for iinld.rnirntantion Is June 8, 1',176.



Dcfinition.-Skilled and/or reliliabilitation services are those servi(ce-( furnished
under the general direction of a physician which require the skills of tech-
nically or professionally trained personnel, and are provided either directly or
under the superviion of such personnel.

I. General
A. Each skilled nursing ,patient must meet all three items of criteria under
this section and at least one itemn under either Section II or III.
1. The patient req(li'es skilled nursing services or skilled rehabilitation serv-
ices. on a daily ilas-is, which as a practical matter can be provided only in a
s.,killed nursing facility on an iniipatient Ibasis.
2. The patient requires care and services which cannot be provided without
professional nursing services available on a 24-hour li,-si.s.
3. The patient requires physician attention at least every thirty (30) days.
B. The following items of general criteria will also apply to skilled nursing
patients on an individual basis whenever applicable. Each item of criteria need
not apply to vvery patient.
1. Where the inherent complexity of a service prescribed for a patient is su-'h
that it can only be safely and/or effectively performed by or under the super-
vision of technically or professionally trained personnel, it would col stitute a
skilled service.
2. The restoration potential of a patient is not the deciding factor in deter-
mining whether a service is skilled or nonskilled. Even where full recovery or
medical improvement is not possible, skilled care may be needed to prevent, to
the extent possible, deterioration of the condition or to sustain current capacities.
3. A service that is generally noi-skilled would be considered to be a skilled
service where, because of special medical complications, its performance or super-
vision or the observation of the patient necessitates the use of skilled nursing
or skilled rehabilitation pers(1omnel.
1I. Skilled Nursing i n Rehabilitation Serrices
A. Services which would qualify as skilled nursing services:
1. Intravenous, intramuscular, or subcutaneous injections and hypoderim ocylsis
or intravenous feedings.
2. Levin tube and gastrot4o)my feedings.
3. Nasopharyngeal and tracaleotomy aspiration.
4. Insertion and sterile irrigation and replacement of catheters.
5. Application of dressings involving prie--cription medications and aseptic
6. Treatment of extensive decubitus ulcers or other widespread skin disorders.
7. Heat treatments which have been specifically ordered by a physician as part
of active treatment and( which require observation by technically or professionally
trained nurses to adequately evaluate the patient's prigre <.
8. Initial phases of a regimen involving administration of medical gases.
9. Relih -bilitation nursing procedures, including related teaching and adaptive
aspects of nursing, that are part of active treatment.
B. Services which would qualify as skilled rehabilitation services:
1. Services concurrent with the management of a patient care plan including
tests and measurement of range of motion, strength, balance, coordination,
endurance, functional ability, perceptual deficits, speech and language or hearing
2. Therapeutic exercises or activities which, because of the type of exercise.
employed or the condition of the patient, must be performed by or under the
supervision of a qualified physical therapist or occupational therapist to eist'ire
the safety of the patient and the effectiveness of the treatment.
3. Gait evaluation and training furnished to ret,,ire function in a patient whose
ability to walk has been impaired by neurological, muscular or skeletal
4. Range of motion exercises which are part of the active treatment of a spe.i fic
disease state which has resulted in a loss of, or restriction of mobility (as
evidenced by a therapist's notes showing the degree of motion lost and the degree
to be restored.)


5. AlI ii it t Tii v- hlicraply \li iti hlia .c.levuialized kinowuv,1gt. a Ild juldgmlent of a
ql' :~i: ,.l; t -rll i4t i. r-e',I ii;-cd tI, ilk.-i."ii ;.iid :L [li4iiiit'na| ce p 'o ira m
lq--' IIIl lll iliit llal i.Vllll ji ll it] : ,''ri tic rI'a '-t--.Il'vI ( (if th I patienlit and con-
-:.(i 1,f NN it\ H it .- p.Jti,'ilt's ':];,Ip city ;Lin l tft'l'-l era [i< .
L;. !. l r.1 i'iJd. ..hlitrt \\at' ailiil jici-rt\ a v tlheiralyv Ireatmein its liv ai qIualiftied
p ,h 1 -i, hl ih1eI'i -! ..
7. II 4 .i'k. h].1 d'ocd]:iL'-r. infruarcti ic .at lt ii!,, liar:Affi i.illis aind wliirlpool
in p:! i,.! ,;l:ir .1;-... '\tlien-i ilie l pai i; iit's c. iitditi, is iozniplivated liy circulatory
i t,:;; .it !ic~ y : i r' c, i -< r,1 d ,,-. i- i l i /..u i ,l n ,i ,,' n \v ,*~i .nl .. f r';|i I t ,,-. or nt l n'] r r' i i pl u -;li(' i o ns(]l'
A;i:d Hi' .-1Li!l-. i.,,\\ lr(! :itid j11!.llitim Lt of ; 'iinaiilii'td ply -:i'al tl 'irl'pist are

S. S ,ti,-74 If I ( i lniilly or v prifs.i(ii ally Ilr:iiiitd .-I iv lie iallih or
a,'.li,,*L,,:i- I w 1ii i x'ct-.'; ry fir the r'.:-(Iiratimi of f iition inll .'p-leeti-h or hearing.
IIf. -rir;'rT l\i ir h ( ',it ld Quilify ,t 'ithi rr .Skillrd '\ur.%ing rr Skilled Rch abil-
itl f tI > ,P ,''r rri'cCs
A. 'i'l,' i\' l'ii)il, el.t. nllu ifilZ'iilil1't mnd l *v:ilii:tit-n of a patient care plan, based
,1 rthip l,!yv-.iinll's iurdhtri l c;' .-.,rvi.,.< when. in teri-; (.f the l tient's jiliy,-ical ;i1 Ld( iin(-ntial condlition. such
deve 'l,,, iiialhlai nnlleo t mind cv( aliiatiml' nec.ssitate the invilve-lncnt of tech-
iiiv.illy or l'r(,fh'-,-i4 ,r lly 'ra lii'] pl,.rsd Kle to n'oet his niped-', vr liiite li, recovery,
: lil actuate hiis safety. This \would i in.lufde management (if a plan involv-
iln.l i,'r--,1 1.;iri- s.r- vi'cs whili-e. in lihlit of the piatient's4 co'ndiioin. thp aggregate
(if .ichi ticessi tao1is the uiivolveinent of or professionally trained
p)ers nllel.
B. When the patient's condition is such tlat the skills of a nurse or other
pri ',f,.-.ional or person are required to identify and evaluate the patient's
ne",d for po'-sible miodifications of treatment and the initiation of additional
ndic'al procedures until his condition is stabilized, such service constitutes
skilled services.
C. In ea>es, where the use of technically or professionally trained personnel is
necei--ary to teach a patient self-maintenance, such teaching services would
cn-,titute skilled services.
N,>te.-Personal care services which do not require the skills of qualified tech-
niri:il or prof,-.i-inal persrmnnel are not skilled services, except under the circuni-
si anre- qp)cvified in Secti in III and Item B3 of Section I.

Dtefinition.-An intermediate care facility resident is one who is in need of
nurn-inL home care a:nd requires direct or supervised nursing or rehabilitation
service, not included under the definition for skilled services.
I. G,:ncr-aI
E-:ach i:nterniediate care facility must meet the following three it'inim of criteria :
A. Thle patient's health needs require cmon:stant supervision in an institutional
setting to prevent d(leterioration,/disability.
B. Physician attendance for the individual is required at least every 60 days
uil'-h just i filed othlierwi,,e and documented by tihe attending physician.
C. Nur,-ing care is under the direction of a registered nurse or a licensed
practical nur4e.
II. rn itcrn f c te Care Facility Priden t-Lrrrel I
One who needs extensive care in a nur-ing hm(;ie and i more thaln mildly
incapac.itated, mientaily and/or physically. A regular continuin- need for. or
;arovi-ioni of, some or all the f allowing add(litional illustrative service' is charac-
teristic of intermediate nur-inog care, level 1:
A. Prevention and treatment of skin irritation and treatment of uncomplicated
dcu uitus ulcers.
Note.-Proven ion of skin irritation and dec lbitus ulcers in selecIted indMividuals
mayv justify a need( for skilled nursing care. The need for skilled nursing care
nmut lie documented and justified in the patient's record.
B. Observation of vital signs and routine recording of findings in patient's
C. Administration of oxygen on an emergency or short term basis.
D. T-se of intermittent positive pressure breathing equipment and nebulizers.
E. Simple dressings and routine care of patients with temporary casts, braces,
splints or otlibrr appliances requiring nursing care or direction.


NOTE: The presence of a plaster cast, b'ace, splint or other appliance does
not ordinarily require skilled nursing care unless there are associated conditions
or specific complications present to justify this level of care. The pLc.sf'jce of
the associated conditions or specific complications as well as the need for skilled
nursing care must be documented and justified in the patient's record.
F. Use of protective restraints, bed rails, binders and supports as ordered
by a physician or provided in accord with written patient care policies and
III. Intermcdiai( ca re facility rc-^l, cnt-Level II
One who is mildly incapacitated or ill to a degree to require limited super-
vision in a nursing home, but whose general condition allows considerable inde-
pendent activity and does not demonstrate more than moduiatfe deviation from
normal (acceptable) behavior patterns. A regular continuing need for some or
all the following additional illustrative services is characteristic of intermediate
nursing care, level II:
A. A person who is not dependent on others for their activities of daily living
but would need minimal assistance as described below: Is independently ambu-
latory either with or without assistive devices or who could transfer inde-
pendently from bed or chair to a wheelchair and propel himself. The-,e patients
should be capable of going to a nursing station to receive their prescription
medications; able to meet his own hygienic needs with minimum direction,
encouragement and assistance might include helpl) in and out of a tub or shower,
washing the back, occasional assistance with personal care such as nails, oral
hygiene or hairwashing; must be able to feed himself with minimum assi-;itaiice,
such as cutting his meat or pouring beverages but no hand feeding would be
B. This person may require some assistance in performing range of motion
exercises which are part of routine maintenance nursing care and were pre-
viously ordered by a qualified therapist.
C. Arrangements must be available for promptly and conveniently obtaining
clinical, laboratory, X-ray and other diagnostic services.

Jdc'.m illc, Fla., April 13, 1976.
DEAR NURSING HOME ADMINISTRATOR: I am pleased to announce that, effective
April 9, 1976, the following rates aro established as the maximum rates for
reimbursement under the Florida Medicaid Nursing Home Program :
Skilled care-------------- ----------------------------------------$630
Intermediate care level I--------------------------------------------- 560
Intermediate care level II --------------------------------------- 500

Por skilled care reimbursement will continue to be made at the maximum
rate, Medicare's reasonable costs or usual and customary charges to private
patients, whichever is less.
For intermediate care reimbursement will be made at the niaxziimui rates
indicated above, a percentage of the skilled rate (skilled rate determined by
using Medicare standards and principles for most determination) or usual and
customary charges to private patients, whichever is less.
It is requested that a statement of your facility's usual and customary charges
be submitted to the Bureau of Medical Services immediately so that appropriate
rates for your facility can be determined.
Due to the fact that the effective date of the new rates does not coincide with
the beginning of the month it will be necessary to is.,ue a supplemental payment
for the month of April after the normal payment for the month of April has
been accomplished.
Attached are notices for Medicaid eligibles advising them of the rate changes.
Please distribute a copy of this notice to each Medicaid client residing in your


Any questions related(l to the new rates or the supplenmenal payment should
be addressedl to the Bureau of Medical Services. Post Offttice Box 20,50, Jaecson-
ville., Florida 32202, telephone number t)4-725-3080.
Sincerely yours,
CHIIARLES HTALL., Staff Director.

[From the Miami News, June 4, 1976]
(By Carol Gentry)
A tliird Daide nursing lionip is being a(udited by the state following coniplainits
li at it Iarticilated in tlt. "donation racket."
Miamti 'Convalhescent Home Inc., of 335 S\V 12th Ave., has been drawn into
tlir ,nPi.gilnvestigati4in by the State I)empartment of Health and Rehabilitative
Serve ices.
IIHItS Secretary Wiilain i Page, ordered the probe after the state had received
50 comilpiiaiits froml fa miles of Medicaid patients at 15 different nursing homes
liern, crlintrini. that they had been forced to limy monthly "donations" agai.ii-t
tlieir will.
The homes told the families that they would(l have to take their relatives
to a different himne if the nioney wasn't paid, acc rding to the complaints.
Si'uchII a d(lemand wimild be a violation of state Medicai(l regulations and a breach
of the nursing hrme's Medicaid contract with the state.
Tlie lir.t lionmie to have its books insp:e1tted was Royal Glades, at 166;50 W.
Dixie Highway, North Miamii Beach.
Thli first fphae of tihe three-step audit revealed that Royal Glades obtained
at least $02.000 in donationsn" from the families of Medicaid patients for the
fiscal year 11173-74.
''lie money was given as a supplement to tlhe reimuniirseminent payments from
the sf ate on lbealfI of Medlicaid pntiP'nts. according to an HRS official.
Also bei ., evaluated aire the fi (lindigs froun an indepth look at the books of
C(,oral (ables. Convalescent Hlome, 70G0 SW 8th St.
In a Miami Ntews report June 2 three women swore that they were forced to
.uikn, monthly "dona(titis" ramn',ing from $80 to $140 to Coral Gables in order
for their mothers to receive care there.

[Editorial in the Miami News, June 7, 1976]
TIhliere could hardly be a more cruel racket than the nursing. home "donation"
shakedown schiemne reixuprted last week by Miami News staffer Carol Gentry.
Thie illegal practice, which apparently is u4ed by 'nnany but not all Dade niursiui;
h<'mnes, forces the families of Medicaid patients to make monthly extra payments
which most of then can ill afford. If the relatives refuse to kick in the monthly
(donations, they are told to take Gran dma someplace else.
State Health and Rehabilitation departmentt officials are investigating the
racket, which is in violation of the state-fedleral Medicaid cont ract that specifies
wliat patyment.s are permitted under the Medicaid program. Thle lpublicity itself
no doifuit will curb the practice so)mnewhat, Nbut to make sweeping long-range
clituLue- tlhe investigators will need help from thie Legislature.
First. Floridians nuisut recognize that some kinds of abuses are bound to o cuir
as long as the state continues to cut corners in funding health care for the in-
di'vnit. When some private patients are paying twice as much as tlie state pro-
v-ides for Med(icaid patients, there is boi1nd to lie pressure for equalization of
sompe kind.
Nevertheless. for-profit nursing homes are not required to accept Med-
icvaid pativtiuts at all. If they think thely can do letter by restric(iiug their
clientelee to private patients, they are free to do so, thereby avoiding any eed(l
for the donation shakedown. Conversely, there are nursing homes in Dade
tlat Iprovid(le goid care for Medicaid patients and neither solicit i nor accept (dona-
tions from patients' families.
L.,gfislatoirs who are intereptod in the use of state funds, or in the care (if poor
people, or Noth, shoul(l slcheduile liea rings to det(ernine% why somue homes vain


make it while others claim they can't, and what the state can do to stop tlhe
There certainly is fertile ground in the whole area of donations to for-profit
lbusiiies-es that contract with the state. If a church, for example, runs a hone
as a charity, it certainly is entitled to solicit donations, and donors can write
off tlhe contributions on their federal income t. xes.
But donations to profit-mnaking busiiie,.ses, whether nursing homes, car delher-,
or brick factories, slide quickly toward the definitions of extortion or lbrilbery.
Reform-minded Dade legislators should start immediately to look for means to
distinguish betwet-n charity and graft.

[From the Miami News, June 5, 1976]


(By Carol Gentry)
A state audit has revealed that Royal Glades Convalescent Home in North
Miami Beach obtained at least $62,000 one year in "donations" from families of
Medicaid patients in violation of state regulations.
The audit, conducted over the last two months by the Department of Health
and Rehabilitative Services, covered the 1973-74 fiscal year.
Additional audits have been performed for both the previous and subsequent
years, HRS sources said. But the results have not yet been compiled.
The $62,000, an HRS source said, was paid to Royal Glades on behalf of
Medicaid pa tients to supplement the normal state reimbursements.
Such a supplement is a violation of the nursing home's Medicaid contract
with the state, the HRS official said.
Meanwhile, other auditors are checking the books at Coral Gables Convalescent
Home. The Miami News reported yesterday that Coral Gables officials sqtueezed
"donations" out of three families of Medicaid patients by threatening to reject
the patients if the monthly payments ranging from $80 to $140 weren't made.
The audits are part of an HIRS investigation into the donation racket here.
The probe was launched after 50 Dade families filed complaints against 15 local
nursing homes for using coercion to get contributions.
Those homes which drew the most complaints were the first to be audited, HRS
officials said.
Nursing homes which have state Medicaid contracts may not use any dona-
tions to supplement the money they receive for the care of Medicaid patients.
They may not make the payment of a donation a condition for admitting or
keeping a Medicaid patient.
Penalties for violating these conditions range from loss of license and a fine
to loss of state Medicaid contract.
If Royal Glades lost its Medicaid contract, it would lose more than $44,000
a month. The state is paying $630 a month for each of the 70 Medicaid patients
at the home, at 16650 W. Dixie Hwy, North Miami Beach.
An official close to the state investigation said HRS has not decided what
sanctions it will impose against those nursing homes found to be in violation
of Medicaid regulations.
"We're not after closing nursing homes. We just want them run right," he
said. "The only way to shape these people up is to make an example of one or
two of them."
The biggest problem facing the state, he said, is "digging up witnesses."
Families who have been forced to pay donations are often reluctant to complain
for fear the nursing home will take revenge on their relatives.
"We have two or three families who we think will sign sworn statements
and testify (against the nursing home)," the state official said. "We'd like to
have a couple more."
HRS inquired about Royal Glades' policy on donations last year when com-
plaints started coming in.
The nursing home administrator, Karen Newman, replied to C. Wright Hol-
lingsworth, chief of the Bureau of Medical Services, on March 14, 1975.
"Royal Glades Convalescent Home does not have a policy that requires contri-
butions as a condition for the admission of Medicaid patients, nor for the con-
tinued stay of Medicaid patients," she wrote.


"l'b 'iwVfl, vit'*'ael tin' 'taite of Fl- iridla dots, nt C1 imie near meeting the eost
if (airt, in riir f;wility. \'e d( ;isk hdo. e friend-, fimiilie:. church groups and
i,1hir'. to i l. i ni i it ecfting r dltIi(ciT tihat i in('1i'rrdei ili tlkinl ciLre (f Medicaid
I:i;tiiits so th liit \I e fqn i.,ntil]lt. oulr hiiLli quality 'if car e."
Mr.-. NXe\v' an toli Thl i't, New thati tlhei state reimbursement for Medicaid
'atiitit.s falls ii.,,re Illan S lii a nimntlu short of meeting the cost of care.
But \\ihe n a nnrr-in. bioiint sinm- a Medica"id contrn(ct with the state-as nearly
all of th :1G l30Im s in DPiae haive-it agrees to accitit the state reimbursement
ais paiyinent in full.
lival (;1.iles i... iivneid by Mrs. Neo\vwmiain's fathlier, Dr. Alvin Stern, an optoni-
etrist. Two Pilhtr fn ii ily iiit-iniers work titnre.



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