Minnesota Department of Health (MDH) Seeks Nursing Home Receivership Managing Agent Candidates

The 2015 Minnesota legislature made changes to the Minnesota nursing home receivership laws and allows MDH to create a list of potential managing agents for nursing home receiverships so that if a receivership is necessary, there is a pool of candidates to choose from. When MDH makes the decision to undertake a receivership, MDH must have a managing agent who will operate the nursing home and MDH must identify the managing agent very quickly; ideally within one day. This list of managing agent candidates will be created and kept by the Health Regulation Division (HRD) of MDH and HRD can update the list at any time.

Applicants who wish to be considered as a managing agent for a facility under state receivership may email requests to health.HRD-FedLCR@state.mn.us with the information required below. Please note that the list of managing agents and their contact information will be public data.

Qualifications

Pursuant to Minn. Stat. sec. 144A.15, subd. 2, managing agent candidates must be, "qualified nursing home administrators, or other qualified persons, or organizations with experience in delivering skilled health care services and the operation of long term care facilities." The statute did not define "experience" or require any minimum number of years of experience.

Information about recent Minnesota Receiverships

Since 2009, MDH has been a nursing home receiver three times affecting a total of five nursing homes. Of those five nursing homes, three are still open today and two were closed.

When MDH identifies an emergency requiring a receivership, it makes its internal decision and it chooses a managing agent as quickly as possible, gets a contract in place, and goes into court to obtain a court order authorizing the receivership. When the court issues its order, the managing agent must be ready to go onsite with the court order and begin operating the facility. Two receiverships took two weeks from MDH's internal decision to obtaining the court order and one receivership took one week. When there is an emergency requiring a receivership, it critically important to obtain the requisite legal authority from the court as fast as possible. A managing agent must have the resources necessary to get up and running within days from being chosen to be a managing agent.

During the receivership, the managing agent acts at the direction of MDH. MDH becomes the facility licensee and is issued a new license. As soon as the receivership is in effect, the former operator/licensee is no longer licensed. MDH is the agency with the legal responsibility for the receivership, but it works in partnership with DHS as the state Medicaid agency. There are daily meetings, sometimes several times per day as needed to work through the many issues that occur during a receivership. During the receivership, an enhanced Medicaid rate is set by DHS to pay for the extra costs required during the receivership to get the facility back into compliance with laws, pay the employees, reinstate insurances, and all other costs of operating a facility.

Common Issues During a Receivership

• Health and safety violations. Often there are many serious health and safety violations at the facility and the managing agent is required to operate the facility in compliance with state and federal laws, even if the plan is to close the facility. The managing agent must be able to correct the violations very quickly. The managing agent must have the systems, process and policies available that can be integrated into an established operating environment. Of course, the communications in the early days of a receivership are very important to calm residents and their families about what a receivership means and to ensure them that the residents can remain there. Employees tend to be very grateful initially that a receivership has begun because they are the ones who saw the issues and problems more directly. The employees are often a positive resource and support for a new managing agent. However, there are often issues with various employees and those personnel issues need to be addressed. The managing agent has the authority with MDH's approval to terminate and hire employees as necessary during the receivership. For example, in one receivership, over 10 staff had not had the requisite background studies completed and their employment was terminated. Further, undertrained staff and understaffing are often issues and the managing agent needs to begin the necessary training right away and often, provide the direct-care staff to stabilize the situation. A managing agent must have access to a variety of various skilled staff.
• Payroll and Insurance. One of the early challenges for the managing agent is to recreate payroll soon after coming onsite. Usually the managing agent has to recreate the payroll system because the systems onsite cannot be trusted or are proprietary. This is one of the most important early tasks of the managing agent. Insurances must also be reinstated soon after entry onsite. This could include liability, and worker's compensation policies.
• Money and capital. All of the recent receiverships had serious financial issues before the receivership and vendors were not being paid, and in some cases, Medicaid billing was not being done properly. Often there is a need to focus on collecting resources from various payers from Medicaid, managed care, and other sources. Files and records are in disarray. A managing agent must re-establish relationships with vendors quickly, using their reputation and contacts, in order to keep services going during the receivership. While an enhanced Medicaid rate is set for the receivership period, it is not usually set until the receivership has begun and the managing agent has assessed the challenges and reported them to MDH and DHS. DHS issues Medicaid advances to the managing agent, but sometimes the receivership is established before the advance can be issued by DHS's system.
• Cost tracking. Given the various expenses that occur quickly and often urgently, the managing agent must be able to quickly set up a financial tracking process, a balance sheet and income statement to create a strong and reliable tracking mechanism. Sometimes, the court requires monthly cost reporting.
• IT. A managing agent should have IT resources in order to secure existing systems onsite and to prevent the former operator from controlling IT systems after the receivership begins.

Statutory Disqualifications

Applicants cannot be a managing agent if they are 1) the owner, licensee or administrator of the facility going into receivership; 2) have a financial interest in the facility at the time of the receivership or who is a related party to the owner, licensee, administrator; 3) have owned or operated any nursing facility or boarding care home that has been ordered into receivership or 4) have an interest in the facility going into receivership. When considering an individual on the list as a possible managing agent for an identified receivership, MDH will audit for any possible conflict of interest including pending court orders or current lawsuits against facilities in which the applicant has an interest.

MDH preferred qualifications

• Experience as a managing agent in Minnesota or another state.
• Track record in assisting or turning around struggling nursing homes.
• Applicant is located in a geographic area close to nursing home under state receivership.
• Demonstrated history of providing high quality nursing home services in Minnesota, evidenced by ratings on the Minnesota Nursing Home Report Card of facilities operated by the applicant and including a review of Office of Health Facility Complaints (OHFC) reports where there was substantiated maltreatment or an order issued.

Other factors affecting selection of candidate when nursing home going into receivership is known

• Rural or urban facility.
• Mental illness or other niche populations being served by the facility.
• Extreme numbers of health and safety violations needed to be fixed immediately.
• Uncooperativeness of outgoing operator and potential unique difficulties.

Process to get on the Managing Agent List

Submit documentation in own preferred form, but including the following information:

• Candidate information (name, address, telephone numbers, all corporate names and contact person(s) including title(s)). Professional affiliations and state licenses including what type of license, in what state and the current status of the license. Describe why you are interested in being a managing agent during a receivership.
• Specify locations or regions in Minnesota where the candidate could provide managing agent services.
• Disclose all candidate's activities relating to nursing homes, home care, and other health care
  facilities certified by CMS.
• Describe how the candidate would address each of the "common issues during a receivership" from the list above.
• List candidate's intended subcontractors that they would use during a receivership as managing
  agent including what areas the subcontractors would cover.
• Describe if there are services the candidate cannot provide.
• Describe how candidate will meet the requirement that managing agent provide all accounting,
  internal auditing, bookkeeping, or other administrative services necessary for the operation of the facility.
• Describe communication plan with residents or clients and their families, MDH and other state
  agencies, including the ombudsman offices.
• Describe any previous experience the candidate has as managing agent of a facility in
  receivership either in Minnesota or elsewhere.
• Attest that if MDH contacts candidate for consideration to be a managing agent, the candidate will keep the matter private until a court order is issued authorizing MDH as the receiver and MDH has chosen a managing agent.
• Attest that applicant has not owned or managed a nursing home that went into receivership either in Minnesota or any other state.

If MDH determines that baseline qualifications are met (experienced and no past receivership of facility under candidate's ownership or management), then the applicant is put on the managing agent list and notified.

MDH reserves the final decision on whether or not an applicant's name is placed on the managing agent list. There is no appeal process for applicants not chosen for the list.

If you have any questions, please contact health.HRD-FedLCR@state.mn.us.

THANK YOU for your interest in serving in this important role for the State of Minnesota.