State to audit nursing home company’s use of public funds
A state committee voted Wednesday to approve an audit of California’s largest nursing home owner, Brius Healthcare Services, and whether the company misused hundreds of millions of dollars in government health care funds to benefit its affiliated businesses.
North Coast Assemblyman Jim Wood (D-Healdsburg) is a member of the Joint Legislative Audit Committee that voted in favor of the audit Wednesday afternoon. He said the Los Angeles-based Brius Healthcare Services has a “very convoluted” system of nursing homes under limited partnerships and has connections with other businesses founded by Brius Healthcare’s CEO Shlomo Rechnitz.
“Brius controls one in 14 [nursing home] beds in California and it is a very convoluted network of limited partnerships and all sorts of other mechanisms out there,” Wood said to the Times-Standard. “Part of this audit is to see if they are all legitimate. … Our feeling is the way they’re doing this is to maximize profits. It’s not about providing high quality care for people.”
Brius’ spokesman Stefan Friedman wrote in a statement to the Times-Standard that Brius representatives were present at the committee hearing today and were in full support of the proposed audit.
“Not only will the audit results prove that Brius has abided by all applicable rules and regulations, it will also show that Brius went well above and beyond its duties and obligations to subsidize the care of California’s most vulnerable,” Friedman said.
Friedman also questioned McGuire’s and Wood’s information, which it states was provided by the National Union of Healthcare Workers. The union has been outspoken in its opposition to Brius Healthcare Services and created a website — briuswatch.org — to scrutinize the company and its CEO Shlomo Rechnitz.
“What is most disturbing though is that legislators McGuire and Wood would also glean their information from ‘newspapers’ and blogs, demonstrating their lack of understanding for the very program they oversee,” Friedman continued. “We urge the community and the media to follow the audit through to its findings.”
Brius Healthcare, which owns five of the six nursing homes in Humboldt County and over 80 nursing homes statewide, received over $500 million in reimbursement funds in 2015 from the MediCal and Medicare government health plan programs, which made up 80 percent of its profits, Wood said.
Wood and his North Coast legislative colleague Sen. Mike McGuire (D-Healdsburg) said Brius paid out more than $67 million that year to businesses with similar or related ownership for the purchase of services, goods and supplies, and paid more than $46 million to companies established Rechnitz that serve as landlords for their nursing home facilities.
A letter from McGuire and Wood to the state audit committee from earlier this month states that there is evidence that Brius facilities paid inflated prices to some of these business, with some prices exceeding 200 percent of market averages.
The nursing home company has come under fire for alleged patient health care violations, which has led to state entities denying the company’s bids to acquire more nursing homes and has led to multiple wrongful death lawsuits to be filed in Humboldt County in recent months.
“This is absolutely unacceptable especially when the state and federal government is spending $500 million dollars to care for our state’s most vulnerable in Brius facilities,” McGuire said to the Times-Standard on Wednesday. “We need to hold this corporation accountable.”
Brius Healthcare has expressed dissatisfaction with the reimbursement rates it receives from the state for treating MediCal patients.
The company temporarily stopped accepting MediCal patients into its Humboldt County nursing homes in 2015 while it disputed reimbursement rates with the North Coast’s MediCal provider, Partnership HealthPlan of California. Partnership HeathPlan agreed to increase reimbursement rates to Brius and other long-term skilled nursing facilities.
In the latter half of 2016, Brius Healthcare used its plans to close of three Humboldt County nursing homes to pressure Partnership into providing higher reimbursement rates so as to prevent the closures. Brius Healthcare cited low staffing levels as their reasoning for the proposed closure.
“We are confident we can avoid these closures, but we need PHP to start paying its fair share and allow us to attract full-time staff to meet our patients’ needs,” Friedman told the Times-Standard in September.
Partnership declined to increase rates, prompting Brius to announce its intention to cancel its contract with Partnership. However, this announcement was shortly retracted after it became clear that the company would lose reimbursement funds. Brius announced in November that it would only be closing one nursing home — Pacific Rehabilitation and Wellness Center in Eureka — instead of three.
McGuire and Wood said the audit will likely be completed in 2018 and will be made public when it is given to the Legislature. McGuire and Wood said that the findings could result in legislation or, in the worst case scenario, criminal charges filed by the Attorney General’s Office.
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