Medicaid rates cause assisted-living angst

Buttons is a tiny dog that cost Helen Amsden a small fortune.

The Shitzu’s owner has a degenerative disease and gets around in a wheelchair. While 74-year-old Amsden planned for retirement by saving and purchasing two long-term care insurance policies, she never predicted paying $608 a month for dog-walking services.

During her three years at Northpointe Retirement Community, an assisted-living center in north Spokane, her monthly bills rose from $3,157 to $6,150, an increase of almost 95 percent.Cyndy Asher, Amsden’s daughter, said Northpointe’s marketing staff had told them the facility could accommodate all her mother’s future care needs. But as Amsden’s condition deteriorated, the charges for each additional service exceeded the benefits of one of her insurance policies and put a sizable dent in her savings.

“I don’t care how much money you have, at some point the money is going to run out and it’s going to run out fast,” Asher said.

Although Northpointe staff met with the family every few months to update Amsden’s care plan and charges – including fees to walk Buttons – the family continued paying because moving or getting rid of her dog would have been devastating for Amsden. Then last June Amsden received a letter saying Northpointe could no longer meet her care needs. The state requires facilities to discharge residents when they require a higher level of care than can be provided.

Amsden is among seniors who’ve paid the high price of subsidizing a struggling industry. While Washington state regulates health care and safety in assisted-living centers, and offers some protection from financial exploitation, the state doesn’t restrict what facilities can charge or how often they can raise prices.

Stephen Start, managing partner and CEO of Northpointe, is among those in the industry who blame Medicaid, saying the program underfunds assisted-living and nursing home care for low-income elderly.

While Medicaid pays $58 to $93 a day for assisted living in the Spokane area, an average of $23 short of the cost of care, according to the Washington Health Care Association, a trade group representing more than 200 assisted living and 160 skilled nursing homes.

Washington is one of only a dozen states that use Medicaid funds to provide care services that are alternatives to nursing homes, said David Schless, president of the American Seniors Housing Association, a Washington D.C.-based nonprofit representing companies that finance, build and operate senior housing. “I think Washington is probably one of the real leaders in trying to provide access to long-term care services for low-income seniors in non-institutional settings,” Schless said.

He estimates that 97 percent of the 1 million residents in U.S. assisted-living homes pay out of their own pockets. Businesses wanting to serve low-income seniors are faced with the choice of declining to accept Medicaid or passing along higher costs to private-pay residents, who end up subsidizing the shortfall, he said.

Said Schless: “I don’t know that there are any easy solutions.”

At Northpointe, Medicaid losses have contributed to a vicious cycle: It doesn’t reimburse the facility enough to cover costs, requiring higher rates for private-pay residents, who when they run out of cash turn to Medicaid – a point at which some are asked to leave.

A vulnerable generation

Northpointe is among about 60 assisted-living facilities in five Eastern Washington counties. Experts say they fill a valuable role in allowing the elderly to stay somewhat independent while getting needed help with meals, medication and housekeeping.

Many do a good job, ombudsmen say, but the industry is ripe for consumer problems.

Mary Sue Gorski, a Gonzaga University assistant nursing professor specializing in gerontology and long-term care, said most people over age 75 didn’t plan to live that long. Often they lived in one house most of their lives and the thought of moving from one facility to another can be scary, she said. Between fear of moving and being raised not to question authority, they may not be the savviest of consumers.

Couple those values and the effects of aging with a relatively new and complex industry and there’s potential for abuse, she said.

Shirlee Steiner, regional administrator for DSHS Residential Care Services, which licenses and inspects assisted-living centers, said the state regulates charges for Medicaid residents, but not for private-pay clients. However, the state requires facilities to disclose fees and what’s included in service agreements, she said.

DSHS also monitors compliance on a variety of issues including dispensing medication, documenting health changes, notification of price increases, financial exploitation and coercion of residents, Steiner said.

A center can discharge a resident when that person’s health needs exceed a facility’s scope of care. But it can also let a person go if their means of payment switches from private pay to Medicaid coverage – and they limit their Medicaid beds. A discharge for financial reasons requires 30 days’ notice. “There are some assisted-living facilities that limit the number of Medicaid beds,” Steiner said. “There’s no law that says they have to have a certain number.”

Too many Medicaid units

Built six years ago for $9.3 million, Northpointe has 80 units and features amenities such as an ice cream parlor that serves fresh cookies. Three adjacent cottages, collectively called Arbor House, have homey but secure rooms for residents with Alzheimer’s or dementia.

During its first few years, Start said, Northpointe fell into a financial hole caused by opening 26 apartments to seniors on Medicaid. As costs rose for insurance, wages, benefits and utilities, the shortfall mounted.

“In hindsight, maybe it would have been smarter not to take in so many,” Start said.

A certified financial audit showed Northpointe lost almost $331,000 in 2004 and made $53,000 last year. The center has 15 residents on Medicaid, which creates a $10,000 monthly shortfall, financial records there show.

Records also reflect the loan of $750,000 from Start’s other company, S.L. Start Development, to help offset Medicaid losses. Northpointe still owes Start Development $500,000.

Start said that by underfunding Medicaid, the government forces businesses to make tough decisions that aren’t always fair.

Start said Northpointe never guaranteed a spot for private-pay residents when their money ran out. To lessen confusion, he said, the company created a new resident contract in 2004 that clearly states Medicaid rooms are limited to five or fewer, and reviewed it with each resident. He realizes current circumstances can create a vicious cycle for the elderly, but businesses must either lose money or evict low-income residents. Said Start: “This is a God-awful situation when you have to decide if you’re going to kick someone out in the street or loan the business $750,000 like we did.”

Residents feel drained

Still, some adult children of Northpointe residents accuse the facility of engaging in misleading marketing, and bills that contain mysterious fees and charges for every little service.

Northpointe officials deny misleading residents, saying they’ve worked hard to straighten out billing and help people plan ahead.

Robbie Anderson, who initially looked over the facility with her parents, is among a half-dozen people who say staff marketed Northpointe as a place that would always be home. Her father died after moving into a nursing home, and her mother, Irene Bland, 81, possibly faces eviction.

Bland has spent $140,000 in four years, Anderson said. “My mom would say, ‘Oh, it’s getting so expensive to live here.’ It takes a lot of courage for an older person to be vocal when they’re afraid of moving,’ ” said Anderson, an art teacher at Mead Middle School.

Two years ago, Thelma Granger moved from Northpointe and got a $1,243 bill for replacing the carpet in her unit. The 91-year-old had spilled a cup of coffee that left a stain. But an ombudsman with Spokane Neighborhood Action Programs visited the center and found her apartment had been re-rented and the rug hadn’t been replaced, said her son, Don Manderscheid, 69.

The ombudsman photographed the carpet and referred the matter to University Legal Assistance, a program for seniors run by Gonzaga University. The legal team secured a refund.

The local Washington State Office of the Attorney General received two complaints about Northpointe – something relatively rare in the industry, said Kathy Kostelec, manager of the consumer protection division. A random sampling of Department of Social and Health Services reports for five facilities found Northpointe was the only one fined for financial exploitation.

In September of 2004, a DSHS caseworker found that the center overcharged six residents a total of more than $10,000.

Carl Knepler, Northpointe’s vice president of marketing, said the billing issues arose when the company was integrating a new third-party billing system.

The comparison of DSHS records also found Northpointe had more care deficiencies, including poor health monitoring and medication dispensing, than the other homes – including two others co-owned by S.L. Start.

State licensors look at whether residents are getting proper nutrition, health monitoring and other required services. Violations of regulations can lead to citations, and a pattern of repeat deficiencies can result in fines or further action.

Since 2002, DSHS fined Northpointe for 12 violations. The department also imposed a stop-placement order, prohibiting admission to the home, in April 2002.

By comparison, Riverview Terrace on Upriver Drive, a nonprofit facility, had a good track record with the state. Maplewood Gardens Retirement Apartments, a for-profit business on North Superior Street, had a few care issues but neither facility was the subject of billing complaints, fines or stop-placement orders.

The two S.L. Start facilities were Harbor Crest at Cedar Canyon Estates in south Spokane and Englewood Heights Retirement Village in Yakima. Harbor Crest had few complaints of any sort. Englewood Heights’ reports show some care deficiencies and one complaint by a resident about a $1,500 charge, which was reversed when the facility was notified of the error, the DSHS report said.

Steve Anderson, executive vice president of StartCommunities, which jointly owns and operates four retirement complexes, including Northpointe, said the company responded to the problems at Northpointe by restructuring everything from management staff to care plans and procedures. He said the changes are turning things around.

“Once you have a problem it doesn’t immediately change overnight,” Anderson said.

No place to go

For people who spend a life’s savings, being evicted means starting over again.

Start said less than a half-dozen people have had to move from Northpointe because of financial issues. Any future Medicaid rooms will be reserved for private-paying residents who run out of cash, he said.

For current residents like Bland, the new limit on Medicaid acceptance could mean a move. Now that her money is nearly depleted, Anderson said, it was a struggle to even get the staff to create a waiting list for the private pay residents running out of funds.

Amsden, after receiving her discharge notice, moved into another assisted-living home until her family could find a nursing home.

In hindsight the family should have thought better of a salesman’s claim that one facility could serve all future care needs, “but it’s such an emotional process,” Asher said. “You’re trusting them because you haven’t been through this before and you don’t understand what to do.”

Her mother now lives at Windriver House, which costs $3,800 a month, including nursing and care services, and walks for Buttons.

“She’s able to stay with her dog. That’s the biggest thing,” Asher said. “I can’t take the dog away from her.”