Relentless Health Value
Stacey Richter
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Self-Insured Employers: SNF Fraud or Perverse Incentives? Understaffing, Gamed STAR Ratings, and Medicare Dollars at Skilled Nursing Facilities
Is it fraud — or is it just a perverse incentive? That question sits at the center of Hunterbrook Media's latest investigation into skilled nursing facilities (SNFs), and the answer, as Stacey Richter puts it, matters to self-insured employers and anyone else paying for healthcare. In this episode, Stacey speaks with Michelle Cera, PhD, investigative reporter at Hunterbrook Media, whose investigation — triggered by a tip from an overwhelmed elder abuse attorney — uncovered a pattern of systematic understaffing, self-reported CMS STAR rating manipulation, executive bonuses tied to expense-cutting, and related-party financial engineering that funnels Medicare and Medicaid dollars straight back to corporate, while the most vulnerable patients pay with their health and their lives. WHAT YOU'LL LEARN ✅ How for-profit SNF chains systematically recruit the sickest patients to maximize Medicare and Medicaid reimbursement, then staff below what those patients actually need — keeping the difference as profit and, in some cases, doubling executive bonuses in a single year ✅ How Hunterbrook analyzed millions of publicly available CMS data points across roughly 14,000 skilled nursing facilities, applying a UCSF-developed expected-hours formula tied to patient acuity, to quantify the gap between staffing hours billed and care hours actually provided ✅ Why CMS STAR ratings — the primary tool consumers use to choose nursing homes for loved ones — are largely informed by self-reported, unaudited facility data, and how former employees described manipulation of those ratings as rampant ✅ How related-party transactions allow SNF chains to route Medicare and Medicaid dollars through owned subsidiaries for goods and services like pharmacy, equipment, and insurance — with CMS flagging the overcharges as disallowed costs but lacking any mechanism to recoup them ✅ How a 2024 CMS final rule establishing a federal minimum of 3.48 HPRD (hours per resident day) and a 24/7 on-site registered nurse requirement was ultimately rescinded after industry lobbying — and what that rescission reveals about regulatory capture in the SNF sector ✅ Four concrete policy fixes: codify federal minimum staffing hours adjusted for patient acuity, strengthen reporting standards and auditing so no quality metric is entirely self-reported, create a recoupment mechanism for flagged related-party overcharges, and reform STAR ratings so consumers can distinguish independently verified data from self-reported data WHY THIS MATTERS Right now, Stacey argues, we are endlessly trying to keep up with thousands of profit-extracting geniuses and creating mazes of complexity to regulate actors who have no societal construct keeping them in check. The SNF sector is a case study in what happens when there is no agreed-upon definition of harm — when perverse incentives are just incentives. These are taxpayer, employer, and patient co-insurance dollars potentially going into someone's pocket while a patient is simultaneously being hurt. The 65-plus population is growing, the market is expanding, and — as Hunterbrook's research shows — the model that works from a profit perspective is to take sicker patients, cut the highest-paid staff first, and grade your own homework so no one notices. That playbook, once proven, spreads fast. === LINKS === 🔗 Show Notes with all mentioned links and link to the Hunterbrook article: https://cc-lnk.com/EP515 ✉️ Enjoy this podcast? Subscribe to the free weekly newsletter: https://relentlesshealthvalue.com/join-the-relentless-tribe 🫙 Support the podcast with a small donation to the Tip Jar: https://relentlesshealthvalue.com/join-the-relentless-tribe 🎤 Listen on Apple Podcasts https://podcasts.apple.com/us/podcast/feed/id892082003?ls=1 🎤 Listen on Spotify https://open.spotify.com/show/6UjgzI7bScDrWvZEk2f46b 📺 Subscribe to our YouTube channel https://www.youtube.com/@RelentlessHealthValue === CONNECT WITH THE RHV TEAM === ✭ LinkedIn https://www.linkedin.com/company/relentless-health-value/ ✭ Threads https://www.threads.net/@relentlesshealthvalue/ ✭ Bluesky https://bsky.app/profile/relentleshealth.bsky.social ✭ X https://twitter.com/relentleshealth/ 00:00 Introduction to this episode. 00:40 Fixing the root cause problems with the American healthcare system. 01:40 EP511 with Dr. Siva and Monica Lypson, MD, MHPE. 01:50 Today's root problem topic. 05:12 Introducing today's guest and her latest investigation. 07:43 The conversation with Michelle Cera, PhD. 08:35 How Hunterbrook Media's latest investigation into skilled nursing facilities got started. 11:07 EP509 with Patrick Nelli. 12:58 Article where you can learn more about Hunterbrook Media's investigation and the stories of neglect. 13:20 How inadequate staffing creates neglect in SNFs. 14:03 Connecting the dots between staffing and resident needs. 15:33 Why skilled nursing facility chains are extremely profitable to the detriment of patients. 17:15 How star ratings on CMS can be skewed in the favor of these SNF chains. 21:56 The perverse incentives playbook. 23:20 An example of how executive bonuses are tied to perverse incentives. 27:53 How lobbying walked back the CMS minimum staffing regulation for SNFs. 29:05 Another note in the perverse incentives playbook. 30:08 University of Pennsylvania study on minimum staffing levels. 30:59 How much of these chain SNFs' funding is from taxpayer dollars. 33:16 Another perverse incentive: overpaying sister companies. 34:17 EP482 with Preston Alexander. 35:07 Why CMS can flag overcharging, but they don't have a cost recoup structure. 38:10 The case to be made about how current business dealings within SNFs is fraudulent. 39:30 How to fix the perverse incentives happening in skilled nursing facilities.
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