Read Full Report 

This report identifies New Jersey’s residential long-term care facilities (LTCs) — also known as nursing homes — that consistently receive the lowest possible rating and addresses how the New Jersey Medicaid program (Medicaid) continues to provide substantial funds to these LTCs despite their longstanding failure to improve the safety and quality of their care. Continued funding of these facilities without consideration of their longstanding low ratings exposes Medicaid beneficiaries to unnecessary risks and results in taxpayer funds being used for care that is substantially below average.

Based on public data from the U.S. Department of Human Services, Centers for Medicare & Medicaid Services (CMS), the Office of the State Comptroller (OSC) found that New Jersey’s 15 lowest-rated LTCs, which consist of LTCs that have received the lowest CMS overall rating (one-star) in the first month of each quarter for six of the past eight quarters in 2020 and 2021, provide services to approximately 1,850 Medicaid beneficiaries, or 6.5% of the 28,500 Medicaid beneficiaries residing in New Jersey LTCs. The Medicaid program annually pays these facilities an average of $103 million. In total, the Medicaid program annually spends around $1.74 billion for LTC services, which comprises about 12% of the annual Medicaid budget.

During the period we examined, from 2013 to 2021, the lowest-rated LTCs provided care for Medicaid beneficiaries and received substantial government funding, while consistently receiving the lowest ratings for health inspections, quality measures, and staffing rates. This means that every day thousands of Medicaid beneficiaries have lived in and received health care from LTCs that have been repeatedly cited by state inspectors for serious, widespread, and uncorrected deficiencies that placed patients at great risk of harm. Because Medicaid funds follow Medicaid beneficiaries — and the State’s recent effort to incentivize higher quality care thus far has failed to distinguish in a meaningful way between the highest and lowest rated facilities — the State has paid the lowest-rated LTCs at virtually the same rate as it paid higher-rated LTCs.

This report recommends changes to New Jersey’s Medicaid program to require one-star LTCs to improve their quality of care if they want to remain in the Medicaid program, with a goal of aligning Medicaid payments with improved LTC performance. OSC recommends that the Department of Human Services (DHS), Division of Medical Assistance and Health Services (DMAHS), with support from the Department of Health (DOH), institute a phased approach through which DMAHS imposes increasing levels of restriction on these LTCs while affording the LTCs an opportunity to improve their ratings before the most severe restrictions are imposed. If the LTCs do not improve, DMAHS may bar them from participating in the Medicaid program. In the absence of some consequence for their continued low ratings, the lowest-rated LTCs, some of which have had low ratings for many years, appear unlikely to improve the conditions and care in their facilities.  The recommendations in this report, if implemented, will complement and supplement the various legislative and regulatory reforms that DOH and DHS are implementing.

As part of OSC’s oversight of the Medicaid program, and as a way to evaluate any changes that are implemented, OSC periodically will update the findings contained in this report, including the list of LTCs that consistently receive the lowest possible CMS rating, through OSC’s LTC Dashboard.