Published on Mar 29, 2021
As InnovAge (INNV), the country’s largest for-profit provider of senior day care and health services under the Medicare and Medicaid PACE program, seeks to expand nationally, former employees, regulators, and families of patients are raising concerns about the company’s business model, which appears to prioritize increasing its government funding over providing patient care.
At issue, according to eight former employees of InnovAge who spoke to the Capitol Forum under the condition of anonymity, is the company’s desire to enroll as many seniors as possible in order to receive funds under the Program for All Inclusive Care for Elders (PACE).
“It’s all about the numbers now at InnovAge,” a former employee who worked in enrollment said. Since becoming a for-profit entity in 2016, InnovAge has more than doubled the amount seniors under its care while increasing revenue, 99% of which comes from government funding, by over 240% to $567 million in 2020, according to the company’s S-1 filing.
InnovAge’s growth strategy will rely primarily on increasing enrollment at its existing and future centers. “Our centers are expected to have an average maximum capacity of 800,” the S-1 reads. According to a 2018 report by CMS, the average number of participants at a PACE center was 184.
PACE, a joint Medicare and Medicaid program, pays InnovAge a fixed rate—known as a capitated rate—per month to cover all healthcare costs for each enrollee, which former employees say has incentivized InnovAge to cut corners when it comes to providing care and hiring staff. A whistleblower complaint unsealed last year alleged that InnovAge was “denying [patients] access to thousands of medically necessary services” while still receiving PACE funding.
Regulators in Colorado, where InnovAge is headquartered and operates the bulk of its facilities, are beginning to raise similar concerns.
Earlier this month, the Colorado Department of Healthcare Policy and Financing sent a complaint notice, obtained via a public records request, to InnovAge that noted that “clinic staff numbers are ‘dangerously low’” at one of its facilities, among a litany of other problems.
“Patients are not getting services in a timely manner or without resistance from InnovAge,” an ombudsman tasked with advocating for patients at InnovAge facilities in the Denver area told The Capitol Forum.
PACE facilities are routinely audited by CMS and largely regulated and licensed by their respective state health agencies. If CMS and state regulators find that PACE operators are unable to provide adequate care, they can suspend a program’s ability to enroll new participants in the program.
In 2017, CMS and the Virginia Department of Medical Assistance Services (DMAS) did just that to Riverside Health Systems, suspending enrollment for roughly six months while Riverside fixed concerns raised by the regulators. InnovAge acquired two Riverside PACE facilities in late 2017.
Asked about corrective actions for InnovAge facilities in Virginia, a spokesperson for DMAS said that the department “takes concerns about any PACE facility seriously, and the agency has responded to concerns related to specific InnovAge facilities, resulting in corrective actions in those cases,” but declined to discuss the specific issues at those facilities.
State regulators in Pennsylvania, where InnovAge acquired several facilities in 2019, said they had not received any complaints about InnovAge’s operations of those facilities. Regulators in California and New Mexico, where InnovAge operates the rest of its PACE programs, either declined to comment or did not respond to questions regarding complaints at InnovAge facilities.
CMS representatives also did not respond to questions regarding complaints at InnovAge facilities. However, recent CMS audits of InnovAge PACE facilities, operating under organizational names such as Total Longterm Care and Total Community Options, have found dozens of violations needing corrective action, sometimes immediately, though CMS has not taken any enforcement actions against the company.
InnovAge did not respond to a request for comment for this article.
PACE is a joint Medicare and Medicaid program established in 1997 with the aim of keeping eligible people aged 55 or older that may need a nursing home level of care in their own homes instead.
State Medicaid programs and Medicare pay PACE operators a capitated monthly amount per member that is calculated based on the savings from not having a patient in a nursing home in that locality. InnovAge’s SEC filings estimate that it receives roughly $7,500 per enrollee, per month.
In return, PACE programs are required to provide all care for patients either at adult day care centers or through third party contracts with local specialists, as well as providing transportation to and from the center and specialist appointments as well as medication. Because payments are capitated, PACE programs are by design incentivized to focus on preventative services and patient wellness rather than pay for more expensive acute care.
Initially, PACE operators like InnovAge were required to be non-profit entities. However, in May 2015, the Department of Health and Human services delivered a report to Congress that found no statistical significance in patient outcomes between nonprofit and a pilot group of for-profit PACE programs, greenlighting the expansion of for-profit PACE models.
At the same time that the federal government allowed for-profit PACE programs, the Colorado state legislature passed a bill that would allow PACE programs in the state to convert into for-profit corporations, a bill that was widely seen as benefitting InnovAge.
A review of lobbying disclosures reveals that InnovAge spent hundreds of thousands of dollars per year lobbying both Congress and the Colorado legislature on legislation relating to its for-profit conversion. This lobbying activity goes as far back as 2012, when the company was still a non-profit, and has only accelerated since then, with InnovAge continuing to lobby legislatures in states in which it operates on issues such as expansion of PACE eligibility and immunity for businesses from Covid-19 liability.
Five months after the Colorado bill became law, InnovAge submitted a plan to convert into a for-profit corporation to the Colorado State Attorney General. InnovAge’s conversion plan disclosed that the company had signed a letter of intent with the private equity firm Welsh, Carson, Anderson, and Stowe in December of 2014 to be purchased for over $186 million.
Welsh, Carson, Anderson, and Stowe did not respond to a request for comment for this article.
InnovAge’s announcement to become a for-profit sparked a fierce backlash among senior advocacy organizations in Colorado, who feared that the incentive to maximize profit and revenue would come at the cost of patient care. These concerns were even raised by the founder of Total Longterm Care, the predecessor to InnovAge.
“In my view, the proposed conversion is a betrayal of the ideals and values which once were the bedrock of this program,” Dr. Alan Lazaroff said in a public comment to the Attorney General’s office.
Despite the opposition, the Attorney General nevertheless granted InnovAge’s application, with several stipulations regarding the company’s mission and additional oversight from an InnovAge-specific ombudsmen at the Colorado Department of Human Services.
That conversion, former employees say, was a turning point for InnovAge. With a for-profit model and a private equity firm backing it, increasing enrollment in the program, and thus PACE funding, became the primary driver of the company.
“One way to think of it is that before the switch,” a former employee who worked in enrollment said, “the enrollment and Medicaid eligibility departments worked for the operations group. After the change, we answered to the finance and investment group.”
“The investment group told us to stop caring for people that the state was late in paying for,” the former employee continued, “But we never disenrolled someone because the state wasn’t paying for them. It wasn’t their fault. I don’t think the investment group understood that we owned all the care for the participants.”
“The expectation of the investors was to enroll as many people as possible. And it was important to have the appearance to other investors that it was a profitable company, and a way to do that was to encourage enrollment,” another former employee said.
Several former employees told The Capitol Forum that business development employees would have high quotas for monthly enrollments and referrals to the program and could receive bonuses for exceeding those numbers. Since becoming a for-profit company in 2016, InnovAge has more than doubled the number of participants in its PACE program, which has included acquisitions of other PACE providers in Virginia and Pennsylvania.
“Enrollment starts on the first of the month. That’s when you can get PACE funding,” a former employee said, “and that means that the expectation is that you are working until 11:59 PM the day before if need be, no matter what day it was, to sign people up. People were going out to prospective enrollees late at night to get them to sign documents.”
This focus on growing numbers, according to the former employees, often meant that actual patient needs and eligibility issues could sometimes be overlooked in order to increase enrollment numbers.
According to a former employee at one of the company’s centers in California, “the most concerning thing was the focus to enroll people into the program who had needs that we couldn’t provide for, or on the verge of having those needs, just for the sake of increasing enrollment to get more PACE funds.”
“They were getting sicker people in for the volume,” another former enrollment representative said, “and getting more people in doesn’t necessarily mean getting better service.”
Employees who worked in the operations of InnovAge facilities saw on-the-ground consequences of putting more and sicker patients into the system, with InnovAge unwilling to invest in expanded capacity to meet the needs of its increasing enrollment.
“The amount of people that were being enrolled was taxing the system,” a former Denver social worker said, “The number of patients versus the number of staff to meet patient needs in a timely manner was just not adequate.”
PACE programs are required to provide all medical services for enrollees. InnovAge, like other programs, often has a primary care physician, dentist, physical rehabilitation facilities at its day care centers and contracts out to local specialists for other services.
Former employees told The Capitol Forum that often those third-party contracts were either non-existent or often with providers that could not satisfy the high demand of InnovAge’s increasing client list.
According to one former employee, a lack of contracts was not necessarily InnovAge’s fault, because “finding providers that wanted to take the PACE rate could be hard, especially when they can do private pay. Also, working with the PACE model is complicated.”
“Nevertheless,” the former employee added, “from a regulatory perspective, you have to provide that service. Period. You have taken the PACE funds and you have to figure out how to provide it.”
The whistleblower complaint filed against InnovAge alleged that an internal review found that 852 out of 975 outstanding orders for outside consults had been outstanding for 30 days or more.
Several former employees also stated that there were usually significant delays in medication deliveries because InnovAge wanted to rely on the same drivers that brought seniors to day care centers and appointments to deliver medications.
“The drivers were tasked with picking people up, and those same drivers were the ones that InnovAge wanted delivering medication for the sake of cost efficiency,” one former employee in California said, “but they didn’t have the capacity and so were sometimes not able to deliver them on time. InnovAge didn’t want to pay the extra cost to have the meds delivered by the pharmacy, which would have been more efficient and got the medications to participants on time consistently.”
The whistleblower complaint filed against InnovAge contained exhibits confirming issues with medication delivery at the San Bernardino facility. According to an internal email from 2017, “there still is no transportation courier for deliveries of meds. 33 bags of meds were waiting to be delivered in the clinic this morning… [an employee] spent most of the morning tracking down reports of meds not received. She had 49 voicemails waiting for her when she arrived for work this morning.”
Former employees at other InnovAge PACE facilities also confirmed that late delivery of medications was often an issue at their programs.
Ultimately, according to a former employee in Colorado, “it became clear to me that one of the rules at InnovAge was that the less in-home services we provide, the more money we would make.”
Imbalances in staffing appear to be occurring at PACE facilities that were acquired by InnovAge. According to a social worker’s recent review on Indeed of InnovAge’s facility in Roanake, which the company acquired in 2017, “Management said I would be receiving 60 to 80 patients. That is ridiculous. When I asked fellow social workers about the SW to patient ratio they said with a grim face, ‘We do the best we can.’ Staff appeared burnt out.”
The Capitol Forum spoke with the ombudsman established after InnovAge’s conversion into a for-profit entity as well as the family of a patient at an InnovAge facility in Denver. The ombudsman acts as an advocate for patients at InnovAge facilites, receiving complaints from patients and working to resolve them with the company. Both the ombudsman and the family said that InnovAge was failing to provide the necessary care as required by the PACE program.
According to the ombudsman, their office is receiving complaints from patients that indicate that “staffing at InnovAge facilities is a serious concern, and there is not enough staff.”
“We have been getting a lot of complaints about a lack of dental and podiatry services,” the ombudsman said, “InnovAge closed its inhouse dental facility for most of the last year because of Covid. If they can’t provide it in house, they are required to contract that service out, but patients and families are reporting they don’t have enough contracts to provide the services that are needed.”
“Patients are telling us that have just been hearing ‘no sorry, our dental clinics aren’t open right now’ instead of providing another referral,” the ombudsman added.
While denials for dental and podiatry treatment were the most common issues, the ombudsman said that patient requests for other services or appointments were also being routinely denied without explanation.
The ombudsman serves as a representative for patient interests but has little regulatory ability itself over InnovAge. If patients want more action than what the ombudsman can provide, they are referred to the Colorado Department of Healthcare Policy and Financing (HCPF), the ombudsman said.
Earlier this month, HCPF sent a letter to InnovAge notifying the company of complaints the Department had received about lapses in service at its PACE center in Thornton, Colorado. According to the letter, “The number of clinic staff are not sufficient to meet the medical needs of the participants in the catchment area.”
Summarizing the complaints, the letter also noted that “acute medical issues were observed during several home visits prompting staff to contact the PACE clinic and EMS. The medical issues were described as ‘preventable or not caught by primary care.’ Issues included but were not limited to medication management, infection after surgery, pulmonary embolism, and failure to monitor participants who tested positive for COVID-19.”
Additionally, the complainant stated that InnovAge had failed to properly provide follow up care for patients discharged from the hospital or actively check in on patients.
This is not the first time in recent months HCPF has raised concerns with InnovAge. According to a March 1 letter, HCPF twice rejected a corrective action plan submitted by InnovAge for complaints occurring in 2020. The underlying complaint was withheld from release, citing patient privacy concerns.
This lack of follow up care and communication is a familiar issue to the family of a patient at one of InnovAge’s Denver facilities.
“Our grandmother was diagnosed with dementia,” the family told The Capitol Forum in an interview, “and has been going to InnovAge for four years now. We would move her out of it if there was another place that offered the same type of services as InnovAge.”
According to the family, “the first issue that popped up was that she lost her vision in her left eye. But we didn’t know about it until they switched eye care doctors and the new doctor told us. Apparently, no one had either noticed or bothered to tell us before that.”
Consistent with what many former employees said was a major problem with InnovAge, the family also experienced serious delays in receiving medication.
“Grandmom got breast cancer. She went to a specialist who wrote a prescription for some chemo drugs that he said she needed to start taking that day, but it took 2 or 3 days for InnovAge to fill the prescription,” the family explained.
The family has also experienced other issues relating to a lack of communication between staff at InnovAge.
“She’s diabetic, and we have told staff that several times, but they keep giving her bags of cookies and fig newtons that we find in her walker. Doctors also said she needed to cut back on vitamin C, but they keep giving her orange juice when she’s at the day care center. They just weren’t following the guidelines at all.”
