The State of Illinois has improperly–and possibly illegally –collected an extra $50 million from Medicaid as part of an ongoing strategy to hide thousands of patients with mental illnesses inside nursing homes, a Tribune investigation has found.
To get around a federal regulation requiring the state to pay costs in nursing homes where half or more beds are filled with psychiatric patients, Illinois officials have found a simple solution: count patients with both mental and physical illness as only physically impaired–or don’t count them at all.
Under this juggling of designations, the Illinois Department of Public Aid has been using Medicaid to secretly subsidize 25 nursing homes with a predominance of psychiatric patients, while listing them as geriatric facilities, a Tribune computer analysis of state and federal records shows.
Specifically, despite conclusive evidence that the majority of patients are mentally ill in each of the 25 homes, the state has classified no more than 50 percent of them as such in reports to the federal government. That way, Medicaid shoulders half the cost of care.
To date, the state has reported that just 13 additional nursing homes are predominantly filled with mentally ill patients, requiring the state to foot the bill.
Not only does such a sleight-of-hand by the state divert Medicaid funds earmarked for the poor, but it also allows the state to continue to postpone aggressive action to create facilities specifically designed to care for the mentally ill.
As well, it allows the state to evade responsibility for federally mandated programs to move psychiatric patients out of nursing homes into less-restrictive settings.
Moreover, while more nursing homes are accepting mentally ill patients to fill rising vacancies, the state’s hiding of these psychiatric patients has also obscured hundreds of incidents of violence by such patients, including rape and murder, according to state nursing home inspection records.
Robert Smith, a Public Aid administrator, denies that the state has improperly billed Medicaid or that nurses have embellished diagnoses involving physical impairments.
He does acknowledge that Public Aid’s method for counting mentally ill patients, which is now being challenged by Medicaid officials, is an interpretation of federal standards. However, the state is confident that it can support all Medicaid claims filed.
To hide the mentally ill, Public Aid relies on two paperwork maneuvers, state and federal Medicaid records show.
First, psychiatric patients are not counted as mentally ill if they also have severe physical problems. But a Tribune review of Public Aid records also reveals that some diagnoses of physical problems in the mentally ill have been exaggerated to justify a “severe” designation. Yet the patients weren’t even examined, the state acknowledges.
Jan Richardson is a 65-year-old grandmother who has been mentally ill from a form of schizophrenia most of her adult life, living for the past decade at the Tammerlane Health Care Center in Sterling, Ill.
Yet the state does not count her as mentally ill, claiming the 65-year-old grandmother suffers from severe physical problems.
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In 1994, state nurses examined her file and concluded that Richardson had no physical problems, Public Aid files show. Beginning in 1995, however, Public Aid reported that Richardson suffered from ovarian dysfunction, a cranial dermatosis condition–more commonly known as dandruff–and arthritis, according to medical files obtained by the Tribune with Richardson’s consent. Though nursing home nurses say these ailments do not fall into a category of “severe,” Public Aid nonetheless used them to count Richardson as physically impaired rather than mentally ill to retain Medicaid funding.
Under Medicaid guidelines, severe physical ailments include such conditions as coma, brain-stem damage and congestive heart failure. The state defines it as any condition that requires nursing care.
In a second, more brazen maneuver used to lower the count of mentally ill patients, Public Aid officials say they cannot always determine a patient’s diagnosis. For Medicaid funding purposes, every disease is listed by a unique identification number. But if nursing home files are not complete, Public Aid lists the patients as zeros, meaning they are not counted.
Sandy Shoemaker is a zero patient, one of up to 3,000 such patients statewide, according to Public Aid records.
Two weeks ago, state nurses reviewed Shoemaker’s files at the Tammerlane nursing home and concluded that her medical files were too vague and that a specific diagnosis could not be determined.
The 54-year-old mother of two and native of Dixon, Ill., has been mentally ill for the last 20 years, a torturous decline that resulted in 33 admissions to the Singer Mental Health Hospital, a state mental institution, according to records in her nursing home file. A singer by profession, she has lived at Tammerlane for 10 years. More than a dozen doctors, including state physicians, have concluded she suffers from bipolar disorder, a condition that results in wild mood swings.
Robert G. Hedges, an owner of Tammerlane, said dozens of his mentally ill patients have not been counted.
Hedges believes Public Aid is trying to mislead Medicaid officials about how many nursing homes have been used as dumping grounds for mentally ill patients as the state continues to downsize or close its psychiatric hospitals.
Overall, Public Aid officials document 7,802 patients diagnosed with severe mental illnesses at 506 nursing homes. For Medicaid funding purposes, however, the state lists only 4,171 such patients, contending the remaining 3,631 patients–about 47 percent– suffer only severe physical problems, Public Aid files show.
But even those base numbers may be underreported. A Tribune analysis of state nursing home records shows there are actually about 12,000 mentally ill patients living at 562 nursing homes.
No other state has packed more mentally ill patients into nursing homes, federal Medicaid officials now believe. And no other state has manipulated more patient records to mask the use of federal tax dollars, according to Health Care Financing Administration officials who administer the Medicaid program.
The Tribune reported in a three-part series in September that the state has been engaged in widespread dumping of mentally ill patients that has resulted in neglect, abuse and violence involving two fragile populations, the mentally ill and the elderly.
Findings from the series also sparked a federal Medicaid investigation, which is centering on whether Public Aid is improperly masked the number of nursing homes primarily filled with psychiatric patients.
Federal officials said preliminary evidence shows that Illinois is underreporting the number of mentally ill patients, as well as failing to report nursing homes that operate as psychiatric treatment centers.
No other nursing home illustrates this stealthy strategy–and the resulting violence that can occur–than Jacksonville Terrace in Jacksonville, Ill., which is one of the 25 homes Public Aid maintains is not a psychiatric facility.
Despite this assertion, Public Aid files show that 62 of the 79 beds are occupied by mentally ill patients, about 79 percent of the patients. The most recent records are for 1996.
However, Public Aid did not count 26 of the mentally ill patients by claiming physical exceptions; another 14 patients were classified as zero and were not counted.
By reducing the official count of mentally ill patients to below the 50 percent federal benchmark, the state bills Medicaid for half of the expenses at Jacksonville, about $1 million annually, Public Aid records show.
On May 25 last year, a 20-year-old patient diagnosed with schizophrenia went on a murderous rampage. Victor Reyes, who was placed in the nursing home by the state, took a 69-year-old female patient into a shower room and beat her with a chain when she refused his sexual advances. Reyes then ran away and stole a car, later driving into three bicyclists, killing one. Reyes was convicted of murder this year and sentenced to prison.
State Department of Heath inspectors found that Jacksonville failed to provide proper care to Reyes and other patients. Nursing home administrators agreed to pay a $60,000 fine.
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