Shirley Holtz paid private installments at an assisted living facility for 26 months before qualifying for Medicaid. She lived there for two more years on Medicaid before she was evicted. (family photo)
Some residents who had emptied their nest egg to cover personal payment installments were evicted after turning to Medicaid to pay their bills.
April 6, 2023 at 7:06 am EDT
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Shirley Holtz, 91, used a walker to get around. She had dementia and was admitted to a hospice. Despite her age and frailty, Holtz was evicted from the assisted-living facility she called home for four years because she was dependent on government health insurance for low-income seniors.
Holtz was one of 15 residents who were ordered to leave the Emerald Bay Retirement Community near Green Bay, Wisconsin, after the facility stopped accepting payments from a state-sponsored Medicaid program. And Emerald Bay is not alone. A recent spate of evictions has displaced dozens of Wisconsin assisted-living residents who have depended on Medicaid to pay their bills — an increasingly common practice, industry officials said.
The evictions highlight the pitfalls of the US long-term care system, which is being fractured by the pandemic, just as a wave of 73 million baby boomers are reaching an age when they are likely to need more daily care. About 4.4 million Americans have some form of long-term care paid for by Medicaid, the state’s health system for the poor, a patchy safety net that industry officials say underpays facilities.
Residents of assisted living facilities – advertised as a more livable, attractive alternative to nursing homes – face a particularly precarious situation. While federal law protects Medicaid beneficiaries in nursing homes from eviction, the law does not protect residents of assisted living facilities, leaving them few options if they are found out. In Wisconsin, residents who entered Medicaid facilities and those who used up their personal savings after moving in and subsequently enrolled in Medicaid are affected.
“This is a good example that Medicaid assisted living public policy is still in the Wild West phase, where in many cases providers will do what they want even though it’s unfair to consumers.” said Eric Carlson, attorney and director of Long-Term Services and Support Advocacy at the nonprofit group Justice in Aging. “You can’t just walk in and out of these relationships and treat people as random harm.”
Elderly care is overwhelmingly expensive. Boomers are not ready.
The US government does not oversee or regulate assisted living facilities, and no federal data is available on the incidence of evictions. In Wisconsin, the Washington Post counted at least 50 since the case, based on testimonies from operators and nonprofit and state Medicaid agencies. But evictions have become so common that some states, including New Jersey, have issued policies to curb them.
Emerald Bay didn’t explain why it stopped participating in Medicaid. But advocates, family members, and the nonprofit that administered the facility’s Medicaid contract claim the motivation was financial: Medicaid reimbursement is lower than full private pay rates.
Family members said they were upset and angry. Holtz spent all of her life savings to pay for her out of pocket, understanding that once she qualifies for low-income insurance, she would be allowed to stay, her relatives said. Ann Marra, Holtz’s daughter, said her mother – who worked as a professional secretary for much of her life and raised her family in Algoma, a small town on Lake Michigan – deserved better treatment.
Marra feared the eviction would affect her mother’s mental health.
“It’s cruel, heartless and sad,” she said.
After a stressful search, on March 13, Holtz’s family moved her to an assisted-living facility that still honors state Medicaid. Emerald Bay operator Baka Enterprises did not respond to requests for comment.
Advocates of assisted living residents fear economic conditions caused by pandemics are contributing to the problem in parts of the country. Profits in assisted living facilities are threatened by staff shortages and sharp spikes in labor costs, inflation driving up the cost of goods, and higher interest rates. Meanwhile, occupancy rates continue to lag behind pre-pandemic highs.
Industry blames evictions insufficient Medicaid funding. Reimbursements made under federal waivers that allow states to spend Medicaid dollars on elderly care outside of nursing homes are not keeping pace with rising costs, industry officials said.
“Medicaid’s chronic underfunding is unsustainable and limits participation and drives many providers out of the waiver program, limiting access to care options,” said LaShuan Bethea, executive director of the National Center for Assisted Living’s trade group.
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The gap in wage rates between Medicaid and the full amount billed to out-of-pocket families varies between states. While private pay rates are often $5,000 a month or more, Medicaid pays only about $3,000 a month in many states, said Paul Williams, vice president of government relations at Argentum, a trade association that represents assisted living facilities.
The operators “have tried to hold back [canceling Medicaid contracts] while they can, with the hope that reimbursement will be increased to help them afford inflationary factors,” Williams said. “Hope has gone down in some states, and they’re saying, ‘I can’t do this anymore.'”
In 2020, about 18 percent of 818,000 residents in assisted living facilities in the U.S. were supported by Medicaid payments, according to federal data, a rate that has remained stable for at least a decade.
In Wisconsin, at least four facilities have terminated Medicaid managed care contracts in the past few months. In addition to the 15 residents of Emerald Bay, Cedarhurst of Madison had 28 residents who were Medicaid beneficiaries when it terminated its contract last year. Residents found they were evicted after being called to a group meeting in late fall, said Elizabeth Burnette, one of those asked to leave.
“Residents were in tears when they heard they had to move house,” said Burnette, 80. “Most of us are disabled in some way, with walkers and in wheelchairs or rollaway beds.”
Cedarhurst operates the facility, which is owned by a Massachusetts-based real estate investment trust, the Diversified Healthcare Trust. The move to 100 percent private pay at the Madison site was a “tough decision” made in partnership with Diversified Healthcare, said Cedarhurst spokeswoman Christie Schrader.
Cedarhurst became the operator of the facility in November 2021.
“When we took over administration, we took on Medicaid residents with special cases who needed advanced care that we don’t offer in our communities,” Schrader said. “As such, we felt it was in residents’ best interests to help them find alternative accommodation that can provide the care they deserve.”
The Wisconsin lobby and trade group, which represents the long-term care industry, said assisted living operators recognize that evictions are very distressing for residents and their families.
“Not only is it traumatic for the resident and family, it is traumatic for the facility. It really is,” said Rick Abrams, president and CEO of the Wisconsin Health Care Association/Wisconsin Center for Assisted Living. “This is the home of the residents. Everyone understands that.”
He said evictions typically occur when an assisted living facility and one of the state’s nonprofit Medicaid care organizations can’t agree on monthly payments to care for an elderly person. Written notices given to residents during the recent evictions said little about the reasons.
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HarborChase of Shorewood, outside of Milwaukee, had six Medicaid residents when it terminated its Medicaid contracts in January, according to managers of the state’s nonprofit Medicaid-managed-care organizations.
“With the New Year comes necessary changes,” Karin Bateman, chief operating officer of Harbor Retirement Associates of Vero Beach, Fla., the parent company of Shorewood’s HarborChase, wrote in a Jan. 6 three-paragraph letter to residents, informing them that the facility would no longer accept Medicaid. “Our Medicaid 60-day notice period gives you time to plan accordingly.”
Harbor Retirement Associates did not respond to requests for comment.
The evictions have dealt a particularly hard blow to residents who enter assisted-living facilities and pay full rates out of pocket, with the understanding that once their nest egg has been spent, they can remain in the facility under Medicaid. Such arrangements are common across the country and are discussed with families by marketers, according to lawyers and industry experts.
However, facilities can have strict limits on the number of beds they designate as Medicaid-eligible, or they can opt out of state Medicaid contracts entirely. Such caveats may be buried in the fine print of residency agreements or not addressed in the contracts at all, according to the contract terms in the Wisconsin cases reviewed by The Post. Families often enter into such contracts during stressful times as they seek a safe place for a parent who can no longer stay in their own home.
“That’s how people get screwed, by promises that the place will be taken [Wisconsin Medicaid] if they stay two years. Then they either sell to another company or change their mind and drop out of the program altogether, which you really can’t stop them from doing. By that point, the family has run out of money,” said Carol Wessels, an elder rights attorney in Mequon, Wisconsin.
Family members often feel betrayed.
“It’s appalling, to say the least,” said Megan Brillault, whose mother, Nancy Brillault, was evicted from HarborChase of Shorewood after spending most of her $120,000 life savings. “They said, ‘Here, let’s take your money, all your savings, and you can live here forever,’ and 10 months later they say, ‘We miscalculated and we’re not taking any more Medicaid beds.”
Megan Brillault sent The Post an email in which a HarborChase representative said Nancy could switch to Medicaid after paying private plans for a year. The residency contract did not address the issue, said Brillault, an attorney.
Medicaid pays for nursing home care directly. It’s an entitlement — if a low-income person qualifies, the state must fund a nursing home bed. Medicaid covers all costs in nursing homes, including room and board and nursing care.
Assisted living is different. At these facilities, Medicaid funds can only be used to reimburse care expenses such as bathing and dressing and not room and board, although some states offer additional payments to help with rent and food.
Because the overwhelming majority of residents pay privately, the average operating profit for assisted living facilities in the U.S. in 2019 was 29 percent before interest and rent payments were deducted, according to the National Investment Center for Seniors Housing & Care.
Kate McEvoy, executive director of the National Association of Medicaid Directors, said states wanted to give older people options outside of nursing homes but were caught between restrictions on the use of Medicaid funds and the high cost of assisted living.
“This was challenging in what was primarily a proprietary, market-driven model,” she said.
In the eviction order emailed to Holtz’s family in Wisconsin, Baka Enterprises, Emerald Bay’s operator said it has decided to terminate its contracts with the state’s Medicaid program, which covers services for the elderly. It gave no reason but cited a provision of its contract with residents that allowed it to discharge them if they could not afford privately paid rates and the facility did not have designated Medicaid beds.
Kris Holtz, son of Shirley Holtz, said he was unaware of destiny when he moved to Emerald Bay with his mother. Shirley Holtz paid private rates for 26 months before qualifying for Medicaid. She lived in Emerald Bay on Medicaid for two more years before receiving the eviction notice, he said.
The Emerald Bay Medicaid contract was managed by a nonprofit organization called Lakeland Care. “In the end, Emerald Bay asked us to pay the full private rate for these members, which we as a Medicaid-funded agency cannot afford,” Lakeland Care chief executive officer Sara Muhlbauer said in a written statement to The Post.
Experts say moving older people away from familiar surroundings can induce a condition called “transfer trauma,” which accelerates deterioration. Shirley Holtz’s loved ones noticed rapid changes after the eviction, said Marra, her daughter. Her mother lost 15 pounds, she said, and quickly stopped using her walker.
On Monday, three weeks after moving from Emerald Bay to the new facility, Shirley Holtz died. “The move was a huge factor in her downfall,” Marra said in a text.
While she was still grieving, Marra wrote a text message to describe the US long-term care system, punctuated by a red-faced frown emoji. “Kind of angry right now,” she said.