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Schrader Confirmation Complicated by State Dispute With Nursing Home Company

As the state Senate considers the nomination of Dennis Schrader to be secretary of the Department of Health and Mental Hygiene, an ongoing dispute between the state and a nursing home operator has become a factor in its deliberations.

At issue is state oversight of NMS Health Care, which operates nursing facilities in Annapolis, Hagerstown, Hyattsville, Silver Spring and Springbrook.

Attorney General Brian Frosh (D) sued the company in December, charging that patients were illegally moved out of NMS facilities once their lucrative Medicare reimbursement payments expired. The nursing home operator countersued earlier this month, accusing the state, among other things, of conducting a “regulatory assault” against the company and publicizing phony information about NMS that is hurting the company’s bottom line.

The NMS case only came up briefly during Schrader’s confirmation hearing before the Senate Executive Nominations Committee a week and a half ago. That session – held before the U.S. House of Representatives pulled its bill to overturn the Affordable Care Act – was dominated by questions about how the Hogan administration planned to respond to anticipated changes in federal health care policy. Senators were also quick to shower praise on Schrader’s wife, Sandy, a former Republican colleague who was in the audience.

But lawmakers are becoming increasingly alarmed about DHMH’s oversight of NMS, and some are seeking answers from Schrader and the agency before moving forward with his nomination – even though most acknowledge that he is almost certain to be confirmed before the General Assembly adjourns on April 10.

“For me, it’s a big concern,” said Senate Executive Nominations Chairman Bill Ferguson (D).

The Senate panel has scheduled a hearing Monday evening to consider several of Gov. Larry Hogan’s (R) nominees, but it’s not clear if Schrader will be a topic of discussion at that session.

Schrader, who had been serving as Hogan’s appointments secretary, was tapped to be health secretary in late December after Hogan abruptly dismissed Van Mitchell, a former Democratic legislator from Charles County and a popular figure in Annapolis. Schrader has been heading DHMH on an interim basis since then. He cannot remain interim health secretary if he is not confirmed by sine die of this year’s legislative session, however.

According to Frosh’s lawsuit, filed in Montgomery County Circuit Court, NMS – the company’s formal name is Neiswanger Management Services and is based in Hyattsville – has been aggressively recruiting Medicare recipients to enter its facilities following hospital stays, but then illegally discharging them when their remunerative federal reimbursements dry up. This has occurred even if they are still receiving smaller reimbursement checks from Medicaid, according to the suit, which charges that the company “unsafely and unfairly evicted hundreds of frail, infirm, mentally ill, and physically and intellectually disabled people from their five Maryland nursing homes.”

The suit included graphic accounts of patients being dropped off without warning at questionable group homes or other facilities around the state, often without the requisite medical care, staffing or other amenities they needed to assist in their recovery.

Over a 17-month period, according to the attorney general’s office, NMS facilities issued 1,061 discharge notices compared with just 501 discharges at all of the state’s other nursing homes combined.

In its countersuit, filed in federal district court in Greenbelt, NMS accused the state of conspiring to conduct unusual and unreasonably close scrutiny of its nursing care facilities dating back to the administration of former Gov. Martin O’Malley (D). The state’s conduct, the suit alleges, “was undertaken with actual malice, was oppressive, was intentional, or was undertaken with callous and reckless indifference to the constitutionally-protect[ed] rights” of NMS.  The nursing home operator seeks compensation from the state for damages to the company’s reputation and financial health.

But it’s not the details of the lawsuits that concern Maryland lawmakers with regard to Schrader’s nomination. Rather, they are baffled by a series of moves DHMH has made since Frosh first filed his suit against the company in late December, which coincided with Schrader’s takeover of the state health agency.

According to documents obtained by Maryland Matters, DHMH on Jan. 13 issued an emergency order blocking NMS from accepting new Medicare patients. NMS immediately filed a request for an administrative hearing to lift the emergency order, which took place a week later.

On Jan. 24, an administrative law judge recommended that the state rescind its emergency order – but did not order the state to do so. Yet two days later, DHMH reached an agreement with NMS to lift its emergency order, enabling the company to begin accepting new patients.

Some lawmakers who have seen the documents believe that DHMH misinterpreted the administrative judge’s decision and erred by allowing the nursing home company to admit new patients. The lawmakers fear that the agreement does not do enough to ensure patients’ safety or guarantee that they will be kept in NMS facilities once their maximum federal reimbursements expire after 100 days.

What’s more, DHMH as part of the Jan. 26 agreement agreed to name a Pennsylvania physician to be an independent monitor of NMS. But it appears that the agreed-upon monitor, geriatrics specialist Daniel Haimowitz, has appeared as an expert witness on NMS’ behalf at least once – during a case brought by the federal Centers for Medicare and Medicaid Services (CMS) for alleged violations at the company’s nursing home in Hagerstown.

Since the Jan. 26 agreement was put into effect, federal and state regulators have separately called into question NMS practices, according to the documents provided to Maryland Matters. CMS on Feb. 21 said it would deny federal payments for any new admissions at NMS’ nursing home in Hagerstown. And on March 2, the Office of Health Care Quality within the DHMH found serious deficiencies at the company’s nursing facility in Springbrook.

Many members of the Senate Executive Nominations Committee have become aware of these developments from a series of letters between Del. Clarence Lam (D) and DHMH. Lam has been investigating the state’s oversight of NMS in his capacity as a member of the House Appropriations Subcommittee on Health and Human Resources.

Lam is a physician in preventive medicine at the Johns Hopkins Bloomberg School of Public Health. He previously worked on health oversight investigations at the House Oversight and Government Reform Committee on Capitol Hill.

In a letter to Lam dated March 10, Schrader sought to assure the lawmaker the agency has taken adequate steps to ensure patients’ safety at NMS facilities since the Jan. 26 agreement went into effect.

“After much negotiation, NMS signed an agreement that, among other provisions, required it to implement new discharge policies and provided for monitoring by the Department,” Schrader wrote. “The Department is now actively monitoring NMS’ compliance with that agreement.”

Lam wrote a follow-up letter with multiple questions about NMS’ performance and the state’s regulatory history, but Schrader on March 23 responded that he could not say more given the federal lawsuit NMS filed against the state earlier in the month.

Christopher Garrett, a spokesman for DHMH, did not respond on Thursday to a Maryland Matters email seeking comment.

In an interview, Lam said he continued to be concerned about the quality of care patients are receiving at NMS — and about the state’s oversight of nursing facilities.

“The secretary’s most fundamental job is to protect the health and well-being of the people of Maryland, including those in health care facilities regulated by the state,” he said.

But Lam does not sit on the Senate Executive Nominations Committee and does not have a say on whether Schrader should be confirmed.

Hogan has thundered against the Senate’s delay in addressing Schrader’s nomination, and has suggested that Democrats in the legislature would be culpable if the state is not able to put together a coherent response to changes in the federal health care law because there was no permanent secretary in place.

For that reason – and because of the reservoir of good will Sandy Schrader built up with her former colleagues over the years – Dennis Schrader is likely to be confirmed.



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Schrader Confirmation Complicated by State Dispute With Nursing Home Company