With P.A. 96 - 1372 (the Act), the Illinois General Assembly amended the Illinois Nursing Home Care Act to establish a classification of nursing homes to be known as “distressed facilities.” The term is intended to be the licensure equivalent of “special focus facilities” (SFFs), the U.S. Centers for Medicare & Medicaid Services’ (CMS) designation for a poorly performing facility. The Act requires the Illinois Department of Public Health (IDPH) to publish a list of distressed facilities quarterly. (IDPH has published “Quarterly Reports of Nursing Home Violators” for years, which it deems suffices for its obligations under the Act.) The Act has also required IDPH to propose rules which, if they come into force, could result in a sharp spike in the number of Illinois nursing homes labeled as distressed facilities.

Requirements — Such as They Are — Under the Act

The Act provides that until the IDPH establishes the criteria to determine who is to be considered a distressed facility, the criteria will be what the U.S. General Accounting Office (GAO) used in its 2009 Report, GAO-09-689, “Nursing Homes: CMS’s Special Focus Facility Methodology Should Better Target the Most Poorly Performing Homes, Which Tended to Be Chain Affiliated and For-Profit.” This GAO report does not itself set any criteria; rather, it is an analysis of what CMS had done thus far with the SFF initiative and makes recommendations on what CMS should adopt in the future. 

It is interesting to note that CMS has not seen fit to adopt the recommendations in the GAO report. CMS currently has no set criteria for designating a facility an SFF. The states, in consultation with CMS, are each to identify 15 of their poorest-performing facilities by looking at the number of deficiencies cited (usually twice the average, which is 6 to 7 deficiencies per survey), as well as those facilities with more serious problems than most other facilities (including harm or injury) and a pattern of serious problems that has persisted over a long period of time (at least three years). 

SFFs are given two annual surveys each year until they “graduate” off the list. All established remedies and penalties apply. Within 18 to 24 months after designation, CMS expects facilities to improve, be terminated, or request additional time to improve. CMS periodically publishes lists of SFFs in tables with the following five headings: New Additions, Not Improved, Improving, Recently Graduated, and No Longer in Medicare and Medicaid. Currently, Illinois only has three SFFs that are still in the initiative and two that have recently graduated.

When determining whether or how to modify the GAO criteria, the Act requires IDPH to complete a test run of its proposed criteria. It may not propose criteria that would result in fewer facilities being labelled distressed than the GAO report identifies.

IDPH has taken these rather loose SFF criteria and proposed rules that would assign a point value to the number and severity of licensure violations over a 36-month period, from 15 to 75 points (which corresponds to a recommendation in the GAO report). Any facility having 75 or more points would be on the quarterly list of distressed facilities. Once identified as such, a distressed facility must notify the ombudsman, residents, resident representatives, physicians, and any hospitals that refer residents. It must also post a notice in the facility, visible to staff and visitors, announcing that it is a distressed facility. 

The Possible Result: A Greatly Expanded List of Distressed Facilities 

Being on such a list would mean more than mere bad publicity. A distressed facility, if IDPH has its way, would be required to hire an independent consultant that meets criteria established by IDPH. If no such consultant is hired, IDPH would place a monitor or temporary manager in the facility who would also be paid by the facility and could have the same authority as a receiver.

The distressed facility would also be required to propose a plan of improvement and demonstrate a good-faith effort at implementation of that plan, after which it would have another 90 days to achieve compliance and take whatever action is necessary to achieve and maintain compliance with licensure standards.

Under those criteria, it is not hard to imagine that all but a very few facilities would eventually become distressed facilities. Every licensure finding would require a response, and every licensure violation would require a hearing. The impact on the industry and, indeed, on IDPH as well, would be tremendous if the proposed rules were adopted. Fortunately, they have not been published — yet. They were circulated at the last Long-Term Care Advisory Board meeting and were tabled until they could get further input. The proposed rules will be discussed again at the next board meeting in May 2017. The Health Care Council of Illinois is currently taking comments.