CEO of Largest Nursing Home Operator in Indiana to Resign in Wake of Medicaid Scrutiny

The president and CEO of the largest nursing home operator in the state of Indiana will resign at the end of next month, marking another milestone in a long-running controversy over complex programs that boost Medicaid rates for nursing facilities in states across the country.

Matthew Gutwein of the Health and Hospital Corporation of Marion County (HHC) will leave the post on September 30, the company announced Monday.

Multiple local news outlets, including the IndyStar — which has produced a series of investigative pieces about the company’s use of nursing home finance mechanisms — initially reported the news.

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“After more than 18 deeply rewarding years, it is time for a new leader to build upon our achievements and continue this critically important work for the residents of Marion County,” Gutwein said in a statement. “I am grateful for the opportunity to serve in this role.”

The IndyStar report attributed Gutwein’s departure to pressure from the company’s board of trustees, though the board thanked the soon-to-be former CEO in the same statement.

“His legacy will be felt for many years to come, and he has graciously agreed to collaborate toward a successful transition,” a quote attributed collectively to the board stated.

Together with operations partner American Senior Communities, HHC runs 78 nursing facilities across the Hoosier State, along with five assisted living properties and 340 “garden homes.”

Both companies have received media scrutiny in recent months over the use of a complex state program that boosts Medicaid rates through a system known as intergovermental transfers, or IGTs.

Under these structures, the federal government provides increased Medicaid funding for nursing facilities owned by county hospitals, encouraging such companies to snap up nursing facilities. In some cases, the county hospital or other government entity owns the facility in name only, with another operator handling day-to-day operations.

A detailed IndyStar report, published in March, accused HHC of using supplemental funds intended for its network of nursing homes to instead develop a new hospital complex in contravention of the IGT model’s intent. HHC — along with other hospital systems that have benefited from the program — defended the practice as sound, and pointed to significant investments made in both hospitals and health clinics in underserved areas.

But the heat continued on HHC and American Senior Communities into the summer, with a follow-up IndyStar report alleging that a 2017 fraud investigation into the latter company was much more extensive than the public and prosecutors knew.

The Centers for Medicare & Medicaid Services (CMS) has targeted intergovernmental transfers and other Medicaid-boosting programs with the Medicaid Fiscal Accountability Regulation (MFAR), a proposed rule that would crack down on state-level efforts to goose the federal government’s Medicaid match.

“We have seen a proliferation of payment arrangements that mask or circumvent the rules where shady recycling schemes drive up taxpayer costs and pervert the system,” CMS administrator Seema Verma said in a statement announcing the proposal last November. “Today’s rule proposal will shine a light on these practices, allowing CMS to better protect taxpayer dollars and ensure that Medicaid spending is directed toward high-value services that benefit patient needs.”

Industry leaders have generally responded with grave concerns over the potential for substantial Medicaid cuts under MFAR, which would also target quality-based initiatives such as the Quality Incentive Payment Program (QIPP) in Texas — a state program that diverts extra Medicaid dollars to facilities that make demonstrable improvements in resident care.

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