According to an Oklahoma Association of Health Care Providers 2016 release, a plan to participate in the federal Upper Payment Limit (UPL) program would have increased federal reimbursements to participating Oklahoma hospitals and nursing homes by as much as $275 million per year. 

However, Oklahoma nursing homes and hospitals aren’t receiving any of that money after the U.S. Department of Health and Human Services rejected the state’s plan to join the program. In a newly obtained rejection letter, the Centers for Medicare and Medicaid Services took issue with municipal ownership of multiple nursing homes across the state.

According to advocates for better patient care, nowhere else in the United States could a city own more than one nursing home nor own a home outside its own city limits. However, in Pauls Valley for example, the city couldn’t keep its hospital open, but they received licenses for 29 nursing homes spread out across the state.

The DHHS rejection letter says, “The state has not explained how the cities' involvement in the operations of multiple nursing homes is efficient or economical.”

For Wes Bledsoe with “A Perfect Cause,” a group advocating for nursing home reform, it’s all about profit generated from the homes.

“It was to line the pockets of the cities, but more importantly, to line the pockets of the nursing home operators who are part of this entre scheme,” Bledsoe said.

He cites a 2018  interview in which the Pauls Valley City Manager says the UPL program will provide additional revenue for the city’s now closed hospital, “In theory some of the money from the program is to go for the care of the residents,” James Frizell told the Pauls Valley Democrat.

“In theory? Some of the money? And we are talking $275 million dollars, Medicare dollars,” Bledsoe said. “That’s your money.” He says up to 70% of the additional money generated from the failed proposal would have went toward nursing home operators as incentive fees.

The federal government was also concerned the city ownership was not obtained at fair market value, pointing to a mere $10 state licensing fee to obtain the nursing facility.

“The best interests of recipients are not served by a payment structure that would divert a majority of the supplemental payments from the healthcare providers to the city governments,” the letter said.

Bledsoe says this is the biggest scandal in Oklahoma history and is asking Governor Stitt to investigate the process in which municipalities are able to own these nursing homes and how licensing is approved in contrast to commercial operators.

News 9 reached out to Governor Stitt’s office for comment but did not hear back.

The Pauls Valley City Manager says the denial is “a dead issue” and refused to comment further. Pauls Valley isn’t alone, municipalities in Hugo, Medford, Fredrick and Sapulpa also own nursing homes.