Capri Gardens Rehabilitation and Nursing Care in Lewis Center Ohio. Foundation Health Solutions owns the 80 bed skilled nursing facility. Photo by Graham Stokes.

Ohio’s nursing home industry poured at least $6.1 million into state politics and an array of dark money political groups between 2016 and 2020, an Ohio Capital Journal investigation has found.

The surge in spending comes as the state has steadily increased its payments to nursing homes through Medicaid, a state and federally funded insurance program for the poor and elderly that pays care costs for about two-thirds of long term care residents. 

While reimbursement rates for other health care providers are determined by the Ohio Department of Medicaid, nursing facilities’ rates — the basis for $6.2 billion in long-term care spending every year — are guaranteed in state law.

The result is a system in which state lawmakers accept millions of dollars for their campaigns from nursing homes, and then determine how much to pay individual homes for the care of Medicaid patients — the source of most facility revenue.

Between 2011 and 2017, the average Medicaid reimbursement rate (per patient per day) climbed from $175 to $193, a 10% increase, according to data from Miami University’s Scripps Gerontology Center. A $1 increase in the rate — multiplied by the roughly 36,000 Medicaid patients and 365 days per year — alone bears massive budget consequences. 

Most of the political contributions trace back to the Ohio Health Care Association, which says it represents about 1,100 long term care providers that tend to an estimated 85,000 patients per day. 

OHCA operates a 501(c)(4) non-profit entity that has contributed $3.4 million between 2016 and 2019 to a web of fellow 501(c)(4)s, tax records show. These types of entities, technically known as “social welfare” groups but more commonly referred to as “dark money,” are not required to disclose their sources of funding.

They generally operate in the shadows, avoiding the public scrutiny of individual and PAC contributions. 

state lawmakers get millions of dollars for their campaigns from nursing homes, then decide how much to pay individual homes for the care of Medicaid patients — the source of most facility revenue.

Of the $3.4 million from OHCA, $365,000 went to Generation Now, a dark money spender that pleaded guilty earlier this year to its alleged role in a pay-for-play political scheme.

Federal prosecutors accused then-House Speaker Larry Householder, R-Glenford, of secretly operating Generation Now to field nearly $61 million from FirstEnergy Corp. He then allegedly spent it to engineer passage of House Bill 6, a lucrative package of energy legislation including a nuclear plant bailout worth $1.3 billion to FirstEnergy.

Prosecutors also accused the late Neil Clark, a high-powered Republican lobbyist, of playing a key role in the scheme. Clark worked as a lobbyist for OHCA for 30 years.

Besides the commonality through Clark, both OHCA and FirstEnergy contributed heavily to two of the same dark money groups — Securing Ohio’s Future and Generation Now. An affidavit attached to documents used to arrest Householder even makes a reference to Householder’s fundraising efforts targeting nursing homes. 

Bob Krapenc, an attorney representing Generation Now, declined to comment. Householder declined interview requests and did not respond to written questions. 

The sudden rush of spending from the industry follows Householder’s return to public office in 2017 and his campaign to return to the Speaker’s dais through 2018. After winning his House seat, he began a fundraising campaign to help elect a slate of Republican candidates who would vote him into the Speaker’s office in 2019.

Several individual nursing home operators, their families, and industry lobbyists have also contributed massive sums, campaign finance records show. Brian Colleran, who operates a chain of 57 nursing homes, and his nearly wife contributed more than $700,000 to Republicans between 2016 and 2020.

Ronald Wilheim, an executive with Communicare and its chain of nursing homes, and his family donated a combined $481,000 between 2011 and 2020. 

PACs representing three industry trade associations spent about $1.5 million on politics between 2011 and 2020. OHCA led the bunch with $1.3 million during the period, compared to LeadingAge Ohio ($66,000) and the Academy of Senior Health Sciences ($137,000).

Some of the biggest elected recipients of industry funding (not including dark money) include:

Paper trail

Brian Colleran operates Foundations Health Solutions, which manages 57 nursing homes around the state. He and his wife jointly were the largest political donors in the industry between 2011 and 2020, according to an Ohio Capital Journal analysis of campaign finance data. 

Together, the Collerans gave about $77,000 to Householder’s campaigns; $87,000 to Patton’s campaigns (Patton says Brian Colleran is his second cousin); $68,000 to DeWine’s campaign; $50,000 to Attorney General Dave Yost’s campaign; large donations to a spread of PACs; and nearly $200,000 split between 12 more candidates. 

In 2017, Colleran and his business partner Daniel Parker paid nearly $20 million to settle Medicaid fraud allegations that the U.S. Department of Justice lodged in 2012. They were accused of billing claims to Medicaid for unnecessary treatment at 18 of their nursing facilities and billing Medicare for hospice services for ineligible patients.

Prosecutors, representing three company whistleblowers, said Omnicare, a CVS subsidiary, paid a “grossly inflated price” of $50 million to purchase Colleran’s drug business, Pure Services Pharmacy. 

Colleran, who prosecutors identified as the “principal architect” of the scheme, then steered his nursing homes’ patients, most of whom are covered by Medicare and Medicaid, to Omnicare for prescriptions. Prosecutors said this violates federal anti-kickback laws.

“The sole value to Omnicare was Pure Services’ referral stream of [Colleran’s company]-owned nursing facilities,” DOJ lawyers wrote in the lawsuit. “The ostensible purchase price paid to Colleran was a kickback to Colleran for this referral stream.”

The settlement is not a finding of guilt in the matter and none of the accused were convicted. 

CVS did not respond to repeated inquiries. Colleran, through his company and a phone number he’s associated with, could not be reached.  

“That was between him, his attorneys and his accountant and I know nothing about that,” Patton said in an interview. 

Parker, Colleran’s business partner, contributed more than $93,000 in total between 2017 and 2020 to Householder, a GOP campaign committee, DeWine, House Majority Leader Bill Seitz, and Yost. He also gave nearly $38,000 to DeWine. 

Another Colleran associate, Robert Speelman, who prosecutors identified as Colleran’s right-hand man, contributed more than $25,000 to Householder and $12,500 to DeWine-Husted between 2017 and 2018.

Yost did not respond to specific questions about accepting contributions from parties accused of Medicaid fraud and anti-kickback statute violations. Amy Natoce, a spokeswoman, provided a statement.

“Dave Yost’s extensive track record of rooting out fraud, holding the corrupt accountable and reforming government speaks for itself,” she said. “Contributions never have, and never will, play a role in his work to protect Ohioans.”

Another prominent donor from the industry, Ronald Wilheim, president of the long-term care division at CommuniCare, is among the most prolific in state politics.

He and his family have contributed more than $481,000 to state candidates between 2011 and 2020.

“I make contributions to support public officials I believe in, based on their character, values and beliefs,” he said in a written statement through a spokesman. 

“I care about Ohio’s future and issues like education, school choice, deregulation and immigration reform. I want good leaders in Ohio, who bring in jobs to boost the economy, and that boost spills over to benefit us all.”

Dark money

Starting in 2016, 55 Green Meadows began contributing what would be a total of $3.4 million over four years to a spread of 32 fellow 501(c)(4)s.

OHCA doesn’t hide its alignment with 55 Green Meadows. Both entities share an address (55 Green Meadows Drive, Lewis Center) and an executive director, Pete Van Runkle. 

However, many of the entities 55 Green Meadows contributes to have no public profile and no explicit motivating political force. For instance, Ohio Works, a mysterious entity whose federal tax exempt status was revoked in May 2020 for failing to file an annual report with the IRS, received $395,000 from 55 Green Meadows. 

Melissa McNulty, a GOP fundraiser named on Ohio Works’ business documents, did not respond to inquiries via phone or LinkedIn.

55 Green Meadows’ 2020 financial data is not yet publicly available through the IRS, so it’s impossible to evaluate the full scope of its muscle during the last election cycle. OHCA provided its 2019 annual report, which has not yet been posted on the IRS’ website, upon request. 

Some of the largest benefactors of 55 Green Meadows between 2016 and 2019 include:

Van Runkle declined interview requests. In a statement, he said the pandemic has highlighted the critical role OHCA plays for its members in advocating for nursing facilities and helping caregivers meet health and safety regulations.

He said the association has lobbied for 70 years with the hope of guiding policy toward outcomes that support the interests of quality long-term care for individuals and their families. 

“OHCA and its members are also engaged in the political and issue advocacy process and make contributions, which are fully disclosed in filings required by law,” he said. 

Contributions to governor

DeWine received at least $300,000 from nursing home industry operators and lobbyists between 2017 and 2020, according to a review of campaign finance records.

The bulk of it comes from the Collerans ($68,000) and the Wilheims ($72,500).

Some of the dark money spending from 55 Green Meadows flowed to entities that supported DeWine.

For instance, in 2018, Securing Ohio’s Future contributed $2.1 million to Securing Ohio’s Future Action Fund, which gave $4.6 million to Majority Strategies, which spent millions backing DeWine. In 2019, Securing Ohio’s Future gave $100,000 to Protecting Ohio’s Future Inc.

The Cincinnati Enquirer reported that the similarly named Protecting Ohio Inc., which also received FirstEnergy funds via a pass-through entity, paid for mailers supporting the governor’s daughter in her bid for Greene County prosecutor. 

55 Green Meadows gave $140,000 to State Solutions, an arm of the Republican Governors Association, which backed DeWine.

It also gave $50,000 to the Ohio Governor’s Residence and Office nonprofit, as well as $10,000 to DeWine’s inauguration committee.

Dan Tierney, a DeWine spokesman, declined to answer specific questions. 

“Campaign donations do not play a role in the policy decisions of the DeWine Administration,” he said in a statement. 

Budget perks

In 1979, the Ohio General Assembly declared that day-to-day living conditions for many state nursing home patients were inhumane. 

“Patient deaths from scalding hot water, roach and mice infestation, filthy rooms and toilets, sheets soiled with bodily wastes, and overcrowding were not uncommon,” lawmakers wrote. 

The homes, meanwhile, paid their administrators handsomely and would bill Medicaid for things like trips to Hawaii, ski and golf equipment, restaurant dinners and clothing.

The findings came in a 187-page, bipartisan report, based on 100 public hearings and testimony from 400 witnesses about conditions in state nursing homes. Out of the report came an overhaul of how the state regulates nursing homes, including placing the funding formula in law.

Democratic Rep. John Begala, who signed the 1979 report, said in a recent interview that sponsoring legislation that placed nursing homes’ funding formula into state code turned into a personal regret of his. He said he wishes he wrote the bill to “sunset,” or automatically expire after 10 years. 

“It basically had the consequence, as the chief sponsor of the legislation, of making that statute a gravy train for both political parties to hit the nursing home up for major contributions every year,” he said.

Republican Gov. John Kasich tried and failed to take on the industry, according to Greg Moody, a former senior aide on health policy and now a professor at Ohio State University’s John Glenn College of Public Affairs.

Every two-year budget cycle, the administration tried to remove thereimbursement formula from law and let the Medicaid Department set the rates.

The Kasich administration scored an early win in 2011, Moody said, increasing funding to community-based elder care and tying more money to quality incentives. He attributed the win in part to a revenue shortfall that year. In every cycle since, however, nursing homes’ reimbursements increased; facilities sidestepped serious quality incentives to improve their care; and the formula stayed under control of state lawmakers.

“Every budget [cycle], we submitted a budget with the formula coming out. Every budget in the House, they restored it,” he said.

“It became this tradition. Going into the Senate, we would propose an alternative like a quality add-on. That would come out in the Senate. The budget would get enacted with no change in nursing facilities.”

Seitz, a longtime lawmaker and top ranked Republican, gave a similar explanation.

“For 21 years, the administration has tried to put it in rule, and for 21 years, we’ve said no,” he said. 

The industry saw several budget wins in this time frame. The Republican-controlled General Assembly rebuffed efforts from the Kasich administration in 2013 to impose serious quality incentives for their funding. In 2017, lawmakers added a market basket index into the formula, providing the industry an “annual statutory increase for nursing facilities tied to the Medicare market basket,” according to a report from the Joint Medicaid Oversight Committee. The adjustment amounted to a $239 million increase for the two-year budget cycle, according to a JMOC report.

Kasich vetoed the provision. He said in aveto message it would eliminate accountability and quality measures and, and squeeze the Medicaid Department’s ability to “best ensure the quality and efficiency of Medicaid nursing facility programs.”

In nearly unanimous votes in the Houseand Senate, lawmakers overrode the veto. Only Mike Duffey, then a House Republican, opposed. Duffey did not respond to inquiries. 

Similar industries, subject to Medicaid rates that depreciate over rebasing cycles, look on at concepts like annual inflationary adjustments in envy.

Larke Recchie, CEO of the Ohio Association of Area Agencies on Aging, said in a statement in response to a new state budget proposal this week that home and community-based care need more support.  

“While we appreciate that the House kept the Governor’s one-time modest rate increase for home and community-based services in Medicaid, it’s simply not enough,” she said. “Over 2000 Ohioans are waiting to receive PASSPORT and other home and community-based services, while Ohio nursing homes have a 63% occupancy rate. Now more than ever older Ohioans want to remain in their home and avoid congregate care settings.”

Ohio Assisted Living Association Executive Director Jean Thompson represents 587 facilities that assist elderly patients who require a lower level of care than skilled nursing.

She said her members’ rates were set in 2006 and didn’t receive any increase at all until 2019.

The market basket adjustment policy ended at the start of 2020 and was replaced with the current quality incentive structure. However, some experts say it’s a toothless approach.

“My understanding of the current metrics is there aren’t a lot of dollars at risk, and the metrics they have to meet are pretty easy to meet, so everybody meets them,” said Susan Ackerman, a former JMOC executive director.

On Tuesday, the House Finance Committee released its edits of DeWine’s proposed budget. Just like his predecessor, DeWine proposed letting the Medicaid Department set nursing homes’ reimbursement rates. The House rebuffed the idea, releasing a plan that “reverts nursing home rates to statute, instead of by rule.”

Lawmakers also added $58 million in annual payments to nursing homes above what DeWine proposed in his executive budget. 

Seitz said the pandemic clobbered nursing homes — their costs are way up from the pandemic and their patient loads are down. He said about half the new money is tied to quality incentives. 

When asked if those incentives are strong enough, he pointed to a separate provision in the budget requiring the Medicaid Department to establish a commission of “seven nursing facility stakeholders” to analyze the current quality incentive system and make recommendations. House Speaker Bob Cupp, speaking to reporters Thursday, mentioned the stakeholder proposal as well.

“We do want to answer exactly that question: what is appropriate in terms of the quality measures?” he said. 

A powerful shield against lawsuits

Last summer, DeWine signed into law House Bill 606, which shields businesses from lawsuits related to COVID-19. It passed with bipartisan support.

The legislation raises the legal standard required for plaintiffs to sue health care providers for pandemic claims, requiring them to prove either “gross negligence” or a “reckless disregard of the consequences or intentional, willful, or wanton misconduct.”

It applies to all businesses, but the pandemic has left few industries more exposed than long-term care facilities, home to 40% of all Ohio’s pandemic mortality.

Exactly 419 lobbyists registered to pull and prod lawmakers one way or another, including 10 from OHCA and five from LeadingAge. It was the second-most lobbied bill of 2020, according to a state report.

Lawmakers passed the bill over concerns from elder care advocates who argued the bill would unnecessarily make it harder to hold nursing homes, an industry with long-standing infection control problems, accountable.

Eighteen senators co-sponsored the bill, including Sen. Steve Wilson, R-Maineville, whose wife is the CEO of Otterbein Senior Life, which represents a chain of nursing homes and elder care facilities serving 4,000 clients. She earns about $445,000 annually, tax records show.

Wilson did not respond to inquiries. John Fortney, a Senate spokesman, said the Legislative Inspector General was consulted and Wilson’s co-sponsorship and vote in support of the bill were deemed appropriate.

“Based on the bill’s broad coverage to businesses across Ohio, there was no problem with the Senator being one of dozens of legislators co-sponsoring or voting on the bill,” he said.

Do nursing homes need the money?

Yes and no, according to Robert Applebaum, director of the Scripps Gerontology Center at Miami University.

The pandemic exacerbated a pre-existing staffing crisis in the industry, attributable in part to meager pay. However, there are no guarantees that new money from an enhanced reimbursement rate will trickle down to workers.

He, like several other Medicaid and nursing home experts interviewed for this report, said the current system gives way too much power to lobbyists via state lawmakers.

Medicaid reimburses care providers at much lower rates than private insurers. OHCA says Medicaid pays about $14.60 per patient per day below the costs to facilities to provide care for them.

Maureen Corcoran, director of the Department of Medicaid, declined repeated interview requests.

At the end of the day, Moody said there’s too much money going to an industry that doesn’t seem to need it, gauging by high salaries of the operators and apparent room in their budgets for the political spending. 

“A redistribution of taxpayer dollars occurred to an industry that didn’t need it, purely because of how it was lobbied in the Legislature,” he said.

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This story is provided by Ohio Capital Journal, a part of States Newsroom, a national 501 (c)(3) nonprofit. See the original story here.