Trends in Long-Term Care - U.S. Senate Special Committee on Aging

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The cost of the sale was $246,000, so that this lease position here is
nowv <strong>in</strong> the hands of a third party who has no relation as far as anyone
can tell, with any of the other people <strong>in</strong>volved <strong>in</strong> this transfer.
Now, what happenecd, the bottom result of all of this, is that this
lease amount, this rent that was agreed upon here, at the time when
this mortgage was $1.3 million, and over, or nearly $1 million of it was
f rom Bergman companies to Bergman companies, this lease was
entered <strong>in</strong>to with these people.
This is the cost which is nowv be<strong>in</strong>g reimbursed by the State. This
cost has then been broken down as a per-bed figure.
* Now, the <strong>in</strong>terest<strong>in</strong>g part of this is that the per-bed figure was based
on the occuDancy at that time, which is 250 beds.
However, the State department of health has recently, I believe it
has gone through with the proceed<strong>in</strong>gs, they were mov<strong>in</strong>g to disallow
57 of the beds. to decertify 57 of the beds <strong>in</strong> the <strong>in</strong>stitution, and thereby
reduc<strong>in</strong>g the cost of the rental, so what they are say<strong>in</strong>g, accord<strong>in</strong>g
to the averages for the area, even though that this lease amount was
corrected, because the <strong>in</strong>stitution had 210 beds, the <strong>in</strong>stitution never
should have had that many beds, and that the rent has to be reduced.
These people went to the State department of health, and said that
because of this sale, vou would drive the bus<strong>in</strong>ess out of existence, and
you would bankrupt the <strong>in</strong>stitution.
To the best of my knowledge, no f<strong>in</strong>al decision has come as to
whether the rent should be reduced or not, but it shows the entire flow.
it shows the fallacy of these rents, at least the rents <strong>in</strong> this <strong>in</strong>stance,
because the <strong>in</strong>stitution never should have had 210 beds <strong>in</strong> it.
Of the 210 beds, 205 are <strong>in</strong> rooms with three or four or more patients.
There are only five patients that are <strong>in</strong> either semiprivate or <strong>in</strong> private
rooms, so here we have an overcrowded <strong>in</strong>stitution, that physically
should not have had 210 beds <strong>in</strong> it, the State department recognized
they should not have had that many beds <strong>in</strong> it, but they were reimbursed
based on hav<strong>in</strong>g that number of beds, and sure enough the rent
that was approved was sufficient to meet that ceil<strong>in</strong>g so, therefore, we
have transactions, a clear problem of transactions prior to the <strong>in</strong>stitution
of medicaid, which clearly affect the medicaid reimbursement formula,
and distort it at least to this one <strong>in</strong>stitution.
I would like to po<strong>in</strong>t out one fact, that all of these documents, all
of these th<strong>in</strong>gs we have here, are th<strong>in</strong>gs that are <strong>in</strong>formation that we
have collected from title searches, which were filed <strong>in</strong> the county clerk's
office.
These are all public documents, but the State department of health
does not have the time nor the facilities to go out and do a long title
search like this, nor do they. accord<strong>in</strong>g to their rules and regulations,
care of what happened back here.
We care, because the commission believes that these are the costs that
have really <strong>in</strong>flated part of this medicaid program, the costs <strong>in</strong> the system,
and have skewed the real estate costs, and have allowed certa<strong>in</strong>
real estate ventures to dom<strong>in</strong>ate the <strong>in</strong>dustry.
It is clear all of these transactions occurred before medicaid, and
afterward they rode along with the way the system was work<strong>in</strong>g.
Senator Moss. How long did it take you to do that search?
Mr. MOAN. Well, we had professional people do<strong>in</strong>g it. It took about
3 weeks for them to go through and trace it all the way back, and they