THE MISSISSIPPI LEGISLATURE

The Joint Committee on

Performance Evaluation and Expenditure Review

Report # 498

State Veterans’ Homes: A Performance Review of Costs and Quality of Care

Executive Summary

Introduction

Each of the Mississippi veterans’ homes was built to accommodate 150 residents, a total of 600 for the four homes. In FY 2006, a total of 652 residents received services in the homes—650 veterans and 2 veteran spouses. At no time during State FY 2006 did any of the homes exceed their established capacity of 150 residents per home. (Because this total number includes all residents that lived in one of the homes at some point during FY 2006, it exceeds actual capacity of the four homes.)

To address legislative concerns regarding the costs associated with operation of the state veterans’ homes and the quality of patient care provided in those homes, PEER focused the review around three major questions:

• Since State FY 2003, how has VAB’s funding mix changed and which segments are bearing an increasing or decreasing portion of the funding stream?
• Since State FY 2003, how have VAB’s operating costs changed?
• Since State FY 2003, has VAB improved quality of patient care?

PEER chose State FY 2003 as the baseline year in formulating its questions because 2003 was the date of the Committee’s last report on this topic. Because State FY 2006 is the most recent completed state fiscal year, most data cited is for State FY 2003 through State FY 2006.

Funding Sources for the State Veterans’ Homes

Since State FY 2003, how has VAB’s funding mix changed and which segments are bearing an increasing or decreasing portion of the funding stream?

Revenue Sources

Since State FY 2003, VAB’s revenues have increased each year, but its expenditures have exceeded its revenues every year except for State FY 2006. VAB received deficit appropriations from the Legislature in State FY 2004 and State FY 2005.

Since State FY 2003, the Veterans Affairs Board’s revenues have primarily come from federal VA per diems, state general funds, and resident fees. VAB’s secondary revenue sources have come from state funds (i.e., the Health Care Expendable Fund, veterans’ license tag fees, the Budget Contingency Fund, and the Cash Stabilization Reserve Fund) and federal funds (construction grant funds, State Approving Agency [SAA] funds, and Medicare B funds).

The state veterans’ homes are not self-supporting and did not make significant progress during the period of State FY 2003 through State FY 2006 toward becoming self-supporting.

Resident Fee Increases

The average cost per patient at the state veterans’ homes has increased 36% since CY 2002. VAB’s resident fee increased approximately 24% from State FY 2003 to State FY 2007, from $50 to $66 per day. The federal VA per diem rate increased approximately 17% from Federal FY 2003 to Federal FY 2007, from $56.24 to $67.71. In order to break even without state funds, VAB must either raise the fees that it charges to residents, reduce its operating costs, or find other sources of non-state revenues.

PEER found that $4.3 million rising at 12% a year would be needed to avoid raising veterans’ rates. At 100% occupancy, an increase in the resident fee from $66 to $71.73 would be needed to break even and eliminate support from state funds. At current occupancy (91%), an increase in the resident fee from $66 to $78.82 would be needed to break even and eliminate support from state funds.

Funding Alternatives

PEER surveyed surrounding states and found they use a combination of funding methods to support their state veterans’ homes. For State FY 2006, surrounding states reported a variety of sources for funding state veterans’ homes, including state subsidies, Medicaid matching funds, Medicare, military and veteran specialty car tag fees, ad valorem taxes, and resident fees. States differed in their policies regarding resident fees, including adjusting rates annually and establishing ceiling caps for rates. Resident fees ranged from $0 to $185 daily.

Costs Associated with Operation of the State Veterans’ Homes

Since FY 2003, how have VAB’s operating costs changed?

VAB-Medicaid Costs Comparison

VAB has overall higher cost per patient per day than comparably sized Medicaid-certified nursing homes. In CY 2005, cost per day per patient was $130.01 for VAB homes compared to $120.71 for Medicaid homes.

For applicants who qualify for full Medicaid benefits, Medicaid will reimburse an average of $152.02 per day to nursing facility providers and applicants who are not Medicaid-eligible will pay an average of that same amount per day. Based on income requirements alone, PEER estimates that approximately 57% of the current residents of the state veterans’ homes are eligible for full Medicaid benefits.

Staffing Costs

During State FY 2004 through State FY 2006, the number of hours worked by veterans’ home nursing staff hired through individual contracts increased, while the number of hours worked by state service employees and employees hired through health care staffing agencies decreased.

PEER researched the cost impact of using alternative staffing compositions at the state veterans’ homes. CY 2005 nursing expenditures at the four homes totaled approximately $12.9 million. If all nursing hours worked in State FY 2006 were worked by state service employees at the average State FY 2007 pay rate, the cost would be $11 million. If all nursing hours worked in State FY 2006 were worked by contract employees at the average State FY 2007 rate, the cost would be $9.6 million.

Medical Benefits Costs

The state does not provide any medical benefits to the patients in the state veterans’ homes that exceed requirements for receiving the federal per diem payments except for the Department of Health requiring direct care nursing staff to provide no less than 2.8 hours of care per patient per day and the Legislature authorizing the VAB to spend up to $250,000 to assist indigent veterans and certain surviving spouses of veterans.

Facility Repair and Renovation Costs

Prior to FY 2007, VAB management did not submit formal, written capital improvement plans to the Bureau of Building for repair and renovation of the state veterans’ homes. According to the bureau’s recent inspection report on the state veterans’ homes, the projected costs of all needed repairs and renovations at the state veterans’ homes between State FY 2008 and State FY 2012 amount to approximately $6,710,000. Of this amount, three projects, with an estimated total cost of $1,825,000, should be addressed by State FY 2008.

Quality of Patient Care at the State Veterans’ Homes

Since FY 2003, has VAB improved quality of patient care?

Quality of Care

During CY 2004 through CY 2005, VA inspection reports showed that the Collins and Oxford homes had improved their quality of care and the Kosciusko and Jackson homes had declined in quality of care.

The majority of the deficiencies identified during VA inspection of the homes during calendar years 2004 and 2005 relate to patient care, quality assurance and administration, safety, sanitation, and food service.

Quality Assurance

VAB utilizes the following quality assurance methods to improve patient care:

• external monitoring by the U. S. Department of Veterans Affairs; and,
• internal monitoring through critical indicators of quality of care, the Pro-Tracking performance measurement system, quality assurance committees, and a Nursing Services Director.

While VAB’s ability to monitor quality of care has improved with its acquisition of Pro-Tracking services and hiring of a Nursing Services Director, the agency has not developed a comprehensive structure for monitoring quality of care that includes a board with expertise and work experience related to the management of nursing homes, a well-defined comprehensive quality assurance plan, a system for compiling and analyzing consumer complaints, and quality assurance committees that adhere to federal regulations for attendance and recordkeeping.

Recommendations

Costs

1. The Veterans Affairs Board should seek the most cost-effective method for the state veterans’ homes’ compliance with MISS. CODE ANN. §29-5-161 (1972), which restricts smoking in all government buildings.
2. The Veterans Affairs Board should seek executive and legislative branch support for a five-year capital improvement plan for all repair and renovations needed at the four state veterans’ homes. VAB should work with DFA’s Bureau of Building staff to ensure that the capital improvement plan is completed correctly and submitted in accordance with the Bureau of Building’s submission deadlines.
3. The Veterans Affairs Board should routinely assess future repair and renovation projects for grouping to meet the $400,000 per project, per home federal assistance threshold so that the state can take advantage of federal assistance dollars available for repairs and renovations to the state veterans’ homes.
4. According to the U. S. Government Accountability Office, high staffing turnover can directly affect patient care. The Veterans Affairs Board should closely monitor and analyze each home’s staff turnover rates in relation to its nursing staff composition (e.g., contract vs. state employees) in order to determine how the composition of staff is affecting quality of patient care. VAB should make any necessary adjustments to its staff to produce a higher level of patient care.
5. While all state veterans’ homes have decreased their use of staffing agency employees since the 2003 PEER report, VAB should work with the Jackson and Collins homes to further reduce their use of staffing agency LPNs. By reducing the number of staffing agency employees, VAB would help reduce staffing costs for the state veterans’ homes and help produce a higher quality of patient care.
6. VAB’s central office should develop and maintain a real-time management information system to collect and analyze data relevant to operating nursing homes. Such a system should include, but is not limited to:
   
   
   • a daily resident census and profile, including
     
     --   age;
     --   marital status;
     --   sex
     --   whether veteran or spouse of veteran;
     --   Social Security eligibility;
     --   disability eligibility;
     --   total income;
     --   VA pension status and amount;
     --   Medicare status;
     --   date of admission;
     --   length of stay; and,
     --   date of discharge;
     
   • daily direct care staff hours, including
     
     --   hours worked;
     --   nursing credentials, such as CNA, LPN, or RN; and,
     --   employment type, such as state-service, contract, or staffing agency;
     
   • inventory, including
     
     --   medical supplies; and,
     --   office and clerical supplies.
     

Quality of Care and Quality Assurance

7. The Legislature should amend MISS. CODE ANN. Section 43-11-17 (1972) to require that the state Department of Health conduct a full inspection of all licensed skilled nursing facilities, including the state veterans’ homes, at least once each calendar year to determine compliance with all standards, including life safety code standards.
8. The Legislature should amend MISS. CODE ANN. Section 35-1-1 (1972) to add three new members to the Veterans Affairs Board. The new membership should include representation of experience in financial management, nursing home administration, and nursing. The additional qualifications that PEER recommends are:
   
   
   • one member should have five years of experience as a licensed certified public accountant, a certified managerial accountant, or a chartered financial analyst;
   • one member should be a licensed nursing home administrator with seven years of experience in the management of nursing homes; and,
   • one member should be a registered nurse with ten years of experience in nursing.
9. The Veterans Affairs Board should develop a training program for board members in areas including, but not limited to, budgeting, the legislative process, performance measurement, planning, and policy making, which should enhance its abilities to govern the agency.
10. The Veterans Affairs Board should develop written, comprehensive quality assurance procedures to ensure the coordination of quality assurance activities at all of the state veterans’ homes. The procedures should also describe the roles of VAB’s Nursing Services Director, nursing home administrators, and quality assurance committees and nursing home staff in quality assurance. The procedures should specifically address how the quality assurance committees should monitor quality assurance by reviewing VA inspection and quality indicator reports. Also, the committees should conduct meetings and require that committee meeting minutes are well documented and include the following:
    
    
    • a sign-in sheet to document primary physician, director of nursing and quality assurance committee members who attended the meeting;
    • the identification of deficiencies, including those cited by VA inspectors;
    • a plan of action for addressing deficiencies that includes follow-up and completion dates;
    • a copy of quality indicator reports documenting the homes’ performance measures; and,
    • a summary of complaints made against the home and action(s) taken to resolve the complaint.
    VAB’s Nursing Services Director should be required to review quality assurance committee meeting minutes on a quarterly basis to ensure compliance with federal requirements and VAB policies and procedures.
11. The Veterans Affairs Board should develop policies and procedures requiring agency-wide consolidation of complaint information. VAB policies and procedures should require that nursing home administrators submit monthly complaint reports to VAB’s Nursing Services Director. The complaint reports should include, but not be limited to, the following information:
    
    
    • the date the complaint was made;
    • a description of complaint;
    • the name of the complainant and whether he or she is a nursing home resident, family member, or VAB employee; and,
    • a summary (and date) of the complaint’s resolution.
    VAB’s Nursing Services Director should review monthly complaint reports to determine where additional staff training may be needed. Monthly complaint reports from all of the state veterans’ homes should be compiled and analyzed to identify problem areas that must be addressed by VAB management.
12. VAB should conduct an assessment by July 1, 2007, to determine the potential benefits of acquiring clinical outcome management information services that would allow the agency to compare the performance results of the four state veterans’ homes, effectively monitor the accuracy of resident assessment data, and detect resident data for possible errors and inconsistencies. The results of the assessment and VAB management’s recommendations should be presented to VAB’s board for its consideration and approval.
13. The Veterans Affairs Board’s management should create a methodology for setting annual state performance targets (e.g., a specific percentage) for each quality measure that could be used to assist quality assurance committees at each veterans’ home in creating a standard to determine the exact percentages that should be reached for each quality measure.

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