A head-scratcher in the health budget (updated)

by Bill Hammond |  | NY Torch

CitadelAlbany’s practice of doling out millions in “bullet aid” to certain school districts at the behest of favored legislators has become a familiar ritual of pork-barrel politics. But a little-noticed provision of this year’s budget directs $30 million to a single nursing home in the Bronx, which is unusual even by the standards of New York State government.

A paragraph buried in the health and mental hygiene budget bill passed last month entitles the Citadel Rehabilitation and Nursing Center at Kingsbridge to an extra $1 million per year in state Medicaid funds for the next three decades.

The provision declares that the money is “for the purpose of reimbursing expenses related to a facility purchased and transferred immediately following the operation of such facility under a court-ordered receivership.” Attempts to get further explanation from the governor’s Budget Division, the Health Department or the nursing home itself were not immediately successful. The allocation received passing mention in this week’s budget report from Comptroller Tom DiNapoli.

The 385-bed facility, formerly known as Kingsbridge Heights Rehabilitation and Care Center, has a colorful past. Its previous owner, Helen Sieger, was the target of a labor strike in 2008 when she stopped paying her employees’ health insurance premiums. The next year, she was arrested for bribing a hospital worker to refer patients to her facility, then jumped bail and fled to Miami. She died in city custody in 2011 at the age of 57, leaving the facility under the management of a court-appointed receiver.

According to the Health Department records, the owners since last year are Leopold Friedman, who holds a 50 percent stake and is also chief executive, Esther Farkowitz (25 percent), Gabrielle Philipson (20 percent), and Bent Philipson (5 percent).

The new owners’ application to take over and renovate the nursing home, which included a detailed financing plan for the project, made no mention of extra state funding from Medicaid. It estimated the facility would turn a profit of $1.6 million in its third year after renovations were complete.

Contacted by NYTorch, Sen. Klein contended that the extra funding for Citadel will ultimately save the state $78 million. This is because the owners could have qualified for dramatically higher reimbursement from Medicaid if they had built a completely new nursing home, instead of renovating one that already existed. A fuller statement of this argument is spelled out in the sponsor’s memo of a stand-alone bill jointly introduced last year by Klein and Bronx Assemblyman Jeff Dinowitz.

Obviously, the situation is unusual and complex in the extreme. But if the state really saves money by paying a nursing home operator a $30 million bonus for renovating instead of building new, maybe – just maybe – the Medicaid rules need adjustment.

UPDATE: Politico New York’s Josefa Velasquez and Bill Mahoney examine campaign contributions by Friedman and companies he partially owns,  $22,000 of which went to Sen. Klein.