Proposal: Nursing home would have 10 years to pay $1 million owed to the state

Tabor Manor Care Center in Fremont County has filed for bankruptcy while owing the state $1.1 million. (Photo via Google Earth; court document courtesy U.S. District Court)

An Iowa nursing home that owes taxpayers more than $1 million has negotiated a 10-year payment plan with state officials.

In May, the for-profit Tabor Manor Care Center in Fremont County filed for bankruptcy, listing $1.3 million in assets and $2.3 million in liabilities.

By far, the 46-bed nursing home’s single largest creditor is the State of Iowa — specifically, the Iowa Department of Health and Human Services/Iowa Medicaid Enterprises. The home reported that it owed the agency $1,169, 257.

That debt is tied to Quality Assurance Assessment, or QAA, fees that are owed to the state and which date back to 2019, according to bankruptcy records. More than four dozen Iowa nursing homes currently owe the state a total of $10.7 million in unpaid, past-due QAA fees, according to DHHS records.

Last week, attorneys for Tabor Manor filed with the court an amendment to the company’s proposed financial reorganization plan. The new plan calls for the facility’s owners to pay the state $1 million in overdue QAA fees over the course of the next 10 ½ years, with the first payments to begin in roughly six months.

The company would pay $10,930 per month toward the debt – an amount that would include interest payments calculated at an annual rate of 4.25%. For the first several months of payments, interest would be paid at roughly $3,500 per month while the principal would be paid down at a rate of roughly $7,400 per month.

Jeffrey D. Goetz, the Des Moines attorney representing Tabor Manor, noted that the plan has yet to be approved by the bankruptcy court, but he said the state, which is owed the money, has agreed to it in principle.

“I’m not going to speak for the state, but they have verbally told us they are OK with this,” Goetz said. “I can tell you that the terms were highly negotiated and agreed to in principle, and I have no reason to expect that the state will file an objection to this.”

Prior to an agreement being reached on the 10-year payment plan, Tabor Manor’s owner and administrator, Mitchell Worcester, told the court the state had consented only to a payment plan of a relatively short duration that the company rejected as unrealistic.

Dozens of homes behind in payments

QAA fees are a mechanism that has been used by the state since 2009 to drive up expenses at Iowa nursing homes. The quarterly fees paid to the state have the effect of artificially inflating a facility’s cost of doing business. That, in turn, enables the facilities to draw down more money in Medicaid reimbursement from the federal government for resident care.

By design, the increased revenue that the homes see in their Medicaid payments more than offsets the cost of the fees paid to the state.

Under Iowa law, the care facilities are supposed to use most of the increased revenue to boost the pay of their front-line caregivers — which is why the fees are labeled “Quality Assurance Assessment fees.”

However, not all Iowa homes are paying the fees — and of those that do, up to 18% of them have failed to meet all of the legal requirements for spending their additional Medicaid revenue on pay increases for front-line caregivers.

According to DHHS, 41 of the 49 homes that are behind in their payments are currently on some form of “repayment plan.” Maureen Barton of DHHS has said the department is “working diligently to ensure providers are adhering to repayment plans” on the fees that are imposed.

The company that appears to owe taxpayers the most is Accura Healthcare of West Des Moines. Eighteen of the for-profit company’s Iowa care facilities are currently on payment plans with the state, and they now owe a combined $3,644,432.97, according to DHHS.

In 2022, DHHS reported to state lawmakers that of the 379 Iowa nursing homes that were required to spend their increased Medicaid revenue on pay increases for certified nurse aides, 68 of them – or 18% of the total — failed to do so.

An additional 37 homes – or 10% of the total – failed to meet a different standard that required them to spend 60% of their excess revenue on compensation for all staff.

Similar rates of compliance were reported in 2020.