Greedy Profit Schemes Driving Down Quality of Nursing Home Care

10/03/2008 12:32 pm ET | Updated May 25, 2011

Two notable events occurred this week that should be of concern to seniors and families who will have to make the tough decision of placing a loved one in a nursing home.

Number 1. The Inspector General of the Department of Health and Human Services released a report showing that 94 percent of nursing homes around the country have violations.

Number 2. A New York Times article highlights, as of Wednesday this week, Medicare, the nation's largest senior insurer will no longer pay for preventable mistakes that occur in hospitals including serious bed sores, injuries from falls, and infections caused by prolonged use of catheters.

For different reasons both of these news revelations affect seniors and their families but they also shed a revealing light on the industry that cares for our nation's older citizens.

According to the Inspector General, for-profit nursing homes are the worst offenders when it comes to violations in nursing homes. These troubling numbers reflect a dangerous trend in nursing home care of placing profits over patient safety, charging Medicare and Medicaid for errors and using a little known practice called binding mandatory arbitration to avoid the scrutiny of the judicial system.

Slipped into the fine print of nursing home contracts, most people don't know what the heck binding mandatory arbitration is -- which is what nursing homes are counting on. Contracts that families sign can often feature the following scenario: "Nana Smith has nine pairs of socks," "she is to get X amount of medication," "her Medicare payments will go to the facility" and oh yeah by the way " if we happen to injure or kill her you can't hold us accountable." "Now sign on the dotted line."

The practice of playing hide the assets through setting up shell corporations, is another scheme that nursing home corporations have become skilled at in order to protect their profits. Nursing home's sneaky yet creative schemes designed to protect their bottom line leads us to Medicare's latest move to tighten the purse strings.

The motivation behind ceasing to pay hospitals additional money for making mistakes is that it hits institutions in the pockets by providing a financial incentive to decrease preventable errors. Both Senators Barack Obama and John McCain support the proposal.

What is not known is how this proposal will affect nursing homes that are highly prone to committing preventable medical mistakes. Currently nursing homes receive more than $75 billion from government programs like Medicare and Medicaid. Medicare pays higher rates for those who are sicker. According to the Inspector General report, nursing homes were found to be overstating patients' injuries in order to get additional money from Medicare. Essentially, Medicare's practice of increased payments for frailer seniors results in nursing homes profiting from their bad actions.

Why is all this relevant to you and almost every other American? Well it means that you are footing the bill for this for-profit scheme while the quality of care for your grandparents suffers.

When nursing homes can force patients to sign their rights away as a condition of being admitted and when they can bilk Medicare for their bad mistakes and poor care - it leaves one wondering who is really minding the shop.

Both the House and Senate have introduced legislation to protect the right to get justice in the court room and put an end to binding mandatory arbitration agreements in nursing home contracts. Along with passing this legislation the next priority should be to examine why tax payers are footing the bill for nursing homes' negligence.