Medicaid is a joint federal and state program administered by states. The New Jersey Department of Human Services, Division of Medical Assistance and Health Services (DMAHS) administers the Medicaid program and provides health insurance for approximately 2.2 million residents, including residents who are aged, blind, disabled, and those with low- and moderate-income.[7] In state fiscal year (SFY) 2023, the Legislature budgeted more than $17.96 billion in state and federal funds for New Jersey’s Medicaid program.[8] In 2022, New Jersey’s Medicaid program paid $1.72 billion to nursing homes.[9] 

The New Jersey Department of Health (DOH) serves as the state regulatory agency for nursing homes. It licenses and oversees the enforcement of regulations for nursing homes in New Jersey. DOH employees inspect nursing homes on behalf of the Centers for Medicare & Medicaid Services (CMS). DOH reports its findings to CMS, which incorporates these findings into its rating assessment tool to determine nursing home ratings. Both DOH and CMS maintain reports of the federal inspections on their websites. Separately, DOH has its own statutory authority to license and inspect nursing homes, approve changes of ownership, investigate potential noncompliance, demand corrective/remedial actions, curtail admissions, impose penalties, and take other enforcement steps.^[10]

Through the health-inspection process, DOH inspectors determine whether there are deficiencies; establish each deficiency’s impact on residents (severity); and ascertain how many residents are affected (scope). A facility is given a score that ranges from “A” to “L.” A scope and severity score of “L” is the most serious finding because it means that there was widespread harm and “immediate jeopardy.” In contrast, a scope and severity score of “A” is the least serious finding because it means that there was an isolated incident with no actual harm and little potential for harm. According to DOH, immediate jeopardy describes “a situation in which immediate corrective action is necessary because the facility’s noncompliance with one or more requirements of participation has caused, or is likely to cause, serious injury, harm, impairment, or death to a resident receiving care in a facility.”^[11]

DOH inspectors survey New Jersey’s nursing homes and provide their findings to CMS. The data that results from those inspections allows CMS to compare the quality of nursing homes over multiple years, using a one- to five-star rating system, with one star being the lowest and five stars being the highest. CMS compiles this information in its Care Compare website.^[12]

CMS’s five-star rating system uses information from health inspections (both standard and complaint-based), certain defined quality measures, and staffing levels to develop a score for each facility. The health inspection score is, however, the linchpin of the rating system.^[13] This score is developed based on unannounced site visits, conducted by a team of state inspectors from DOH, who spend several days in the nursing home assessing a variety of practices and policies in such areas as resident rights, quality of life, medication management, skin care, resident assessment, nursing home administration, environment, and kitchen/food services. After CMS establishes a nursing home’s health inspection score, it adds or subtracts points based on the nursing home’s quality and staffing measure scores to arrive at an aggregated score. For a nursing home to be among the lowest performers for the first month of each quarter for at least six of the past eight quarters, it means that the nursing home consistently has had more widespread, serious, and uncorrected deficiencies than nursing homes with higher star ratings. According to CMS, “nursing homes with 1 star are considered to have quality much below average.”^[14]

In Table A below, OSC identifies the 12 nursing homes that received one-star ratings for the first month of six of the past eight quarters. In other words, during the two years of OSC’s review period, on eight reporting periods, these nursing homes received one-star ratings at least 75 percent of the time. These facilities have been consistently cited for deficiencies in patient care, medical management, nutritional services, and overall environment.

Table A: 12 Lowest-Rated Nursing Homes^[16]

Facilities listed in RED were included on OSC’s Lowest-Rated LTC List in February 2022 and September 2022.

OSC reviewed recent health inspection reports of the 12 lowest-rated nursing homes and found persistent deficiencies. These deficiencies are notably not all of the deficiencies that are present in each of these nursing homes; they are only the deficiencies that were observed while the inspectors were in the building for a period of days.

According to the reports compiled by DOH inspectors, daily life at these facilities is filled with all sorts of indignities, from chronically cold meals to excrement-stained rooms. Some of the facilities are worse than others, but they are all deficient in ways that indicate they provide substandard care. At Silver Healthcare Center, a DOH inspector found that residents at risk for aspiration were not provided with the appropriate liquids to prevent asphyxiation, which could result in choking or even death. At Grove Park Health Care and Rehabilitation Center, a DOH inspector found three times over a period of six days, that a resident’s fingernails were overgrown and jagged, with a “black substance” visible under the nails.

Residents’ personalized care plans, created by physicians, were often disregarded. At Phoenix Center for Rehabilitation and Pediatrics, the report found that residents were given incorrect feeding tube formulas. At Hamilton Grove Healthcare and Rehabilitation, DOH inspectors found that feeding tubes were improperly administered, creating a risk of aspiration pneumonia, a lung infection that can be fatal. An inspector reported that two residents at Forest Manor HHC had visible bruises on their faces; one of them had fallen repeatedly at the nurses’ station, and the inspector said the facility’s documentation showed no action was identified to prevent future falls. 

In a few cases, DOH found alleged abuse of residents, which the facility had not documented or reported to authorities, as required. According to DOH, a South Jersey Extended Care resident was “roughly handled” by two employees, causing the resident to fall out of the wheelchair onto the floor; the resident landed in the hospital with chest pain. At Silver Healthcare Center, DOH reported that one patient had an unexplained broken arm, and the incident was never investigated. 

The examples above are just a few of the deficiencies noted in DOH’s inspection reports.^[19] While the average DOH inspection results in a finding of five deficiencies, some of these facilities had as many as 30 deficiencies noted in a single report. Some deficiencies included widespread incidents of immediate jeopardy to residents’ health and safety.

Table D shows the date of the most recent CMS routine inspection, a link to the report, the number of deficiencies per facility, and highest scope and severity level for each of the 12 lowest-rated nursing homes.^[20] As noted in OSC’s February 2022 report, high scope and severity deficiency findings are far more likely in a nursing home with a one-star rating than a nursing home with a five-star rating.^[21]

Table D: 12 Lowest-Rated Nursing Homes -- Most Recent Routine Inspections

CMS established the Special Focus Facility (SFF) Program to help states identify and improve quality of care in nursing homes with a history of serious quality issues, systemic problems, and repeated offenses.^[23] Through this program, CMS identifies a list of potential candidates in each state based on weighted results of the last three standard inspections and complaint inspections from the past three years.

For New Jersey, CMS provides DOH with a list of ten candidate facilities each month from which DOH selects facilities to participate, with a maximum of two facilities remaining in the program at a time. For each SFF-selected facility, DOH then must perform a full onsite inspection every six months and use progressive enforcement until the facility graduates from the SFF program or is terminated from Medicaid. After a facility graduates or is terminated, DOH selects a new SFF from the monthly list.

As explained by CMS, graduation from SFF does not mean there are no longer quality issues in the facility; however, there should be an “upward trend in quality improvement.” CMS monitors graduates for three years post-graduation. DOH previously reported that there have been no facility terminations as a result of the SFF program. DOH recently selected Silver Healthcare Center, one of the facilities on OSC’s current lowest-rated nursing home list, to participate in the SFF program.^[24]

As shown in Table E below, three of the four nursing homes that “graduated” from the SFF program within the past three years remain on the lowest-rated nursing home list, and one, Premier Cadbury of Cherry Hill, is again an SFF program candidate after just graduating in 2022. The failure of these nursing homes to improve their performance indicates that the SFF program is not working as intended. Despite pouring state resources into assisting these facilities, the SFF program failed to improve the quality of these nursing homes.

Table E: SFF Graduates 2020-2023

OSC’s February 2022 report highlighted that owners of some of the lowest-performing nursing homes also own/manage/administer other nursing homes. That trend continues with the current list. Twenty of the owners/managers/administrators of the 12 lowest-performing nursing homes own multiple nursing homes in New Jersey. The four individuals listed below own or manage multiple facilities on OSC’s 12 lowest-rated nursing home list. One of these individuals is affiliated with 43 nursing homes in New Jersey. Set forth below is a breakdown of the affiliations of all four of these owners, managers, and administrators, as of January 2023.^[27]

• Zev Farkas owns:
  • Forest Manor (since 2012), which has maintained an overall rating of one since April 2019, with the exception of two quarters, in which it scored an overall rating of two; and
  • Warren Haven (since 2015) which has maintained an overall rating of one or two since first quarter 2016.
• Marc Weisz is affiliated with three nursing homes and Steven Krausman is affiliated with four nursing homes in NJ. Marc Weisz owns and Steven Krausman manages:
  • South Jersey Extended Care (since 2002), which has maintained an overall rating of one for the last ten years, with the exception of two quarters, in which it scored an overall rating of two; and
  • Sterling Manor (since 2002), which has maintained an overall rating of one every quarter since the fourth quarter of 2018.
• Sam Stern is affiliated with a total of 43 nursing homes in NJ, 18 of which received an overall rating of two or lower in January 2023. He is an officer of:
  • Palace Rehabilitation (since 2007), which has maintained an overall rating of one since April 2019, with the exception of two quarters, in which it scored an overall rating of two; and
  • Silver Health Care Center (since 2017), which has maintained an overall rating of two or lower for the last ten years, with the exception of one quarter in which it scored an overall rating of three in 2015.

Attached as Exhibit A is a chart showing more comprehensive ownership information for the 12 lowest-rated nursing homes, including the roles and percentages, if available.^[28]

OSC’s February 2022 report urged DMAHS to adopt a phased approach to connect nursing home quality of care to Medicaid beneficiary admissions and Medicaid payments. It also recommended that DMAHS modify the Medicaid Quality Incentive Payment Program (QIPP) to cease paying nearly identical incentive amounts to the lowest-rated nursing homes as it did the highest performers. The goal was to end the status quo of allowing a substantial number of Medicaid beneficiaries to receive care in persistently low-performing nursing homes that received large amounts of public funds. OSC recognized that implementing policies to achieve this goal may require DMAHS to adopt regulations, request CMS to approve state plan amendments, or take other steps to obtain federal approval.

OSC asked DMAHS to provide details regarding steps it had taken to implement the recommendations in OSC’s February 2022 report. In response, DMAHS pointed to efforts by DOH, including DOH’s data dashboard, which was required by legislation.^[29] DMAHS also noted its collaboration with DOH to address Woodland Behavioral and Nursing Center (Woodland), describing how “[i]n an unprecedented action, DOH and Human Services jointly moved for the appointment of a receiver to manage and eventually close the troubled facility.” DMAHS also explained that it continued to “evaluate long-term strategies for nursing facility quality improvement.” Finally, DMAHS advised that it had modified QIPP eligibility to exclude nursing homes that received a one-star overall rating, nursing homes that were a CMS Special Focus Facility, and/or nursing homes that had two or more high-severity deficiencies during a DOH inspection. These changes effectively excluded each of the 12 lowest-rated nursing homes from the QIPP in SFY 2023.

DMAHS’s response did not directly address OSC’s core recommendation–that DMAHS implement a phased approach to connect quality of care to receipt of Medicaid funding, which, in successive steps, may include imposing programmatic sanctions, such as issuing an order barring further Medicaid admissions, capping the total number of Medicaid beneficiaries, and/or, if necessary, removing existing Medicaid beneficiaries. DMAHS suggested it would not implement OSC’s recommendation because of “limitations of the CMS Star Rating system.” DMAHS stated that its approach to improving nursing home quality has focused on “defining standards and providing support for all facilities to meet them.” DMAHS also noted that it is focused on protecting individual choice by nursing home residents, stating that it is “required to respect the autonomy of individuals and families as they select where and how to access Medicaid benefits.” Finally, DMAHS pointed out that “[a]lthough some facilities may be low performers, they remain licensed by CMS and DOH to provide these services.”

DMAHS’s policy decisions elevate certain goals and interests over others. Allowing residents to choose to receive poor-quality care does protect individual choice but comes at the cost of exposing vulnerable New Jerseyans to harm in nursing homes that are perpetually the lowest-rated. This approach also fails to take into account that denying access to low-performing nursing homes would still leave individuals and families with the autonomy to select higher-quality nursing homes. DMAHS’s choice to fund poor-quality facilities as long as they remain licensed by DOH demonstrates that DMAHS is not willing to exercise its independent authority to decide which nursing homes will and will not receive Medicaid beneficiaries and funding.

Instead, under DMAHS’s approach, unless and until nursing homes are ordered closed by CMS or DOH, which DMAHS admits was, until recently, an “unprecedented action,” these lowest-rated nursing homes will continue to house Medicaid beneficiaries and be paid with public funds for doing so. DMAHS has pointed OSC to its role in the closure of Woodland—an action that was initiated by CMS in 2022 after over two years of troubling reports and a long history of poor ratings going back to 2013.^[30] But in doing so, DMAHS fails to recognize that, using OSC’s methodology, a few of the facilities on OSC’s current list rival Woodland when it comes to the duration of poor-quality care.

In making these decisions, DMAHS has not only rejected OSC’s core recommendation but also declined an invitation from the federal government to be creative in addressing the issue of low-quality nursing home care. CMS recently encouraged states to use existing flexibility to establish Medicaid payment rates that promote better quality of care and health outcomes in nursing homes. Also, in an August 2022 bulletin, CMS reminded state Medicaid programs, including New Jersey, that they have the ability to implement initiatives through the Medicaid state plan, waiver, or demonstration processes. CMS explained that states have “broad flexibility to design their provider payment structures.”^[31] Finally, CMS challenged state Medicaid programs to use data and stakeholder feedback to “inform innovative payment policies that help strengthen safety and quality of care in nursing facilities.”

These directives echo OSC’s recommendation to DMAHS to connect nursing home quality of care to admissions and Medicaid payments. In declining to use the power granted to it by federal law, despite CMS’s encouragement to do so, DMAHS is electing to maintain the status quo and tolerating ongoing and seemingly perpetual poor performance in the lowest-rated nursing homes identified in this report.

OSC’s February 2022 report urged DOH to collaborate with DMAHS in implementing a phased approach to block owners of the lowest-performing nursing homes from owning interests in other nursing homes in order to link quality of care to state licensure and Medicaid payments. Likewise, OSC recommended that DOH obtain guidance from the Long-Term Care Ombudsman (LTCO) on approaches to nursing home quality of care issues.

In response to OSC’s inquiries, DOH noted that it carefully follows state and federal guidelines with respect to surveys and inspections. When appropriate, it penalizes nursing homes, curtails admissions, and in rare cases, issues termination of payment notices. DOH stated that it makes inspection and other information available to DMAHS and the public. DOH cited its role in the response to the conditions at Woodland and a COVID-19 outbreak at another facility. DOH also stated that it currently conducts track record reviews for changes or transfers in ownership in accordance with applicable regulations. DOH also criticized OSC’s reliance on the CMS star-rating, advising that it has developed a better indicator of poor performance than CMS’s star-rating system. DOH contended that OSC’s approach would dis-incentivize the purchase of the nursing home by new owners who may improve the facility and may result in facilities closing and in residents being displaced. DOH emphasized that its goal is to remediate facilities and keep residents in their homes. 

These efforts, which have not been evaluated by OSC because they are outside the scope of this review may, in time, result in improvements to nursing home quality. But, based on the data, it does not appear that they have resulted in noticeable change since OSC’s February 2022 report. The fact remains that, as with Woodland, many of the nursing homes in this report have been low performers for nearly a decade and have shown little or no recent improvement. Seven of the twelve nursing homes on OSC’s current list were also listed in OSC’s February 2022 report. Three of the four facilities that graduated from the SFF program are currently rated as one-star facilities. While DOH’s efforts may, in the future, improve quality, history shows that without a significant change, many of the lowest-rated facilities will continue to provide poor-quality care.