Nursing homes in North Carolina get thousands from this fund but they can't use it to offset main COVID-19 issues. Here's why.

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Wednesday, March 3, 2021
Funds to help NC nursing homes sit unspent as they struggle financially
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At the end of 2020, North Carolina's fund had a balance of $34.5 million, enough money to award each of its 429 nursing homes $80,000. But spending the money isn't so easy.

Millions of dollars are set aside to improve the lives of nursing home residents in North Carolina but the money can't be used to help offset some of facilities' greatest issues, including COVID-19.

Instead, the ABC11 I-Team uncovered thousands of dollars used for ice cream socials, gardens and improving the presentation of food.

This money is in what's called a Civil Money Penalty Fund (CMP). Each state maintains a fund that is built from nursing homes' fines for violations.

These violations range from abuse and neglect to lack of proper infection control plans. Violations in North Carolina have contributed nearly $13 million to the fund between 2018 and 2020.


At the end of 2020, North Carolina's fund had a balance of $34.5 million, enough money to award each of its 429 nursing homes $80,000. However, spending this money isn't so easy.

Federal laws and the Centers for Medicare and Medicaid Services (CMS) sets limits on how this money is spent. Facilities need to submit a grant proposal and prove the money would, "support activities that benefit nursing home residents and that protect or improve their quality of care or quality of life," according to CMS.

While the money added to the fund is caused by facilities failing to comply with certain standards, the projects don't have to work to correct those issues.

The ABC11 I-Team found over the past few years in North Carolina some of these projects connected seniors with children, invested in training resources to care for dementia patients and offered scholarships for nurses to train in wound care.

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However, other approved grants went to create gardens at nursing homes, expand dining room options and purchase TVs.

When nursing homes became hotbeds for COVID-19, facilities and states could not use this money on PPE, COVID-19 testing or to hire additional staff.

North Carolina awarded $9.1 million from the fund on more than 400 grants last year. Ninety-five percent of the grants allowed nursing homes to buy technology and equipment to assist with virtual visits. Other projects approved in 2020 included garden and art projects and LGBTQ Cultural Company Training, according to the state's CMP Reinvestment Plan.

During the same time, hundreds of nursing homes in North Carolina reported a shortage of staff and more than 50 homes got fined for violations. The most recent federal data still showing 90 homes in the state reported a shortage of nursing staff and a handful unable to obtain COVID-19 testing resources on February 14.

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The American Health Care Association / National Center for Assisted Living (AHCA/NCAL) said the use of these funds should be reexamined.

"We are concerned that CMP funds are not widely used when they could be critical resources for facilities. The application and review processes were left up to the states, and unfortunately, many states did nothing with them," an AHCA/ NCAL spokesperson wrote to the I-Team.

The organization said they are advocating the federal government to give nursing homes more access to these funds.

"The fact that facilities have to apply to get funds for somewhat basic things says a lot about our country's failure to adequately to invest in long term care," a AHCA/ NCAL spokesperson wrote to the I-Team.

Operating on a financial brink

Before COVID-19 ravaged through nursing homes, these facilities were already battling a financial crisis.

Millions of dollars in Medicaid underfunding and lack of caregivers is now compounded with additional pandemic costs and declining occupancy rates to threaten the future of these facilities.

The AHCA estimated nursing homes spent around $30 billion nationwide just on testing and PPE.

While the CMP Funds couldn't be used to help with adding staff or expanding protections, federal and state funding did significantly aid facilities in North Carolina. But advocates worry about what happens when the relief money runs outs.

"It's going to be really bad. I don't know of any other way to say it," said Adam Sholar, the president and CEO of the North Carolina Health Care Facilities Association.

Sholar said the average nursing home in North Carolina is estimated to spend more than $400,000 a year to care for Medicaid patients than they received.

With 16% fewer residents reported in NC nursing homes in the last year, facilities are operating with even less revenue.

Sholar said he surveyed a majority of the state's nursing homes and found all of them saw an increase in costs related to cleaning supplies and PPE, 97% reported an increase in staffing cost.

Neil Pruitt is the CEO of PruittHealth and operates some of those homes in North Carolina along with dozens more across the Southeast.

He said at one point his company was operating within $200,000 of not being able to meet its weekly payroll because of PPE purchases.

His company also invested in cameras that monitor temperatures and PPE compliance.

"It's going to be massive. I am concerned," Pruitt said. "I wouldn't be sitting here talking to you today if it wasn't the funding provided by the CARES Act."

Not all facilities were as lucky. The AHCA reported 143 facilities closed or merged in the last year and estimate 1,670 more will meet a similar fate in 2021.

In North Carolina, Sholar still has hope.

"Will we see closures? Will we see bankruptcies? That's really dependent how we as a state manage the other side of this pandemic," Sholar said.

Sholar said he also wishes the CMP funds could be used for more things to help with some of these growing expenses.

"I certainly wish we could use them for more things and it's almost a need in order to be able to reduce that overall balance of funds sitting there. We are going to need to be able to use that for more projects," Sholar said.

Sholar's organization did recently work to get $2.5 million from the CMP fund approved to help recruit 4,000 new nursing aides to the state.

Expanding how the CMP fund can be used is only one part of the solution.

Sholar said going forward state and federal leaders are going to need to work together to help these facilities operate sustainably in the long-term.

This is also a concern shared by AHCA/NCAL. The group is asking for $20 billion in long term care to be included in the next COVID-19 relief package.

"The individuals living in our nursing homes are the most vulnerable in our population and I think it says a lot about us as a state how we care for those who can't care for themselves at the end of their lives," Sholar said. "If we can't at least cover the cost of care then I think we have some searching to do."