Denver’s InnovAge was struggling long before Medicare stopped paying

A company tasked with caring for some of Colorado’s sickest people failed to consistently provide basic services like insulin injections for more than a year before state and federal authorities intervened, as its profit-driven leaders recruited more clients than they could handle, former employees allege.

The Denver Post spoke to seven former employees and board members of InnovAge, a Denver-based elder care provider, and reviewed hundreds of pages of lawsuits, federal inspection reports and whistleblower complaints. All painted a picture of an organization so focused on growth that it continued signing up new people — including some homeless Denver residents who didn’t qualify — while struggling to serve clients it already had.

The Colorado Department of Health Care Policy and Financing announced in December that it would no longer pay for InnovAge to care for new clients covered by Medicaid in the Program of All-Inclusive Care for the Elderly, or PACE, which offers services meant to keep people out of nursing homes. Federal officials made a similar decision for patients covered by Medicare.

The roughly 3,500 clients InnovAge had as of December as the only PACE provider for much of the Front Range can continue to receive services, and the company can submit a correction plan to be reinstated in Medicare and Medicaid, though it hadn’t done so as of the end of June.

The state and the federal Centers for Medicare and Medicaid Services said an audit had found staffing problems and that InnovAge didn’t provide all services that its clients needed, as the PACE program requires. They haven’t released the full audit results, but other publicly available documents and interviews with former employees showed clients didn’t get basic wound care, and some were left in their beds for 16 hours at a time.

PACE is for people 55 and older who would qualify for the level of care provided in a nursing home, but who also could safely stay at home if they had enough support. Providers such as InnovAge have to coordinate medical, dental and eye care, as well as services like transportation to appointments, respite for caregivers and home health care.

For a long time, InnovAge was effective in allowing people with dementia and other significant health problems to remain at home as long as possible, said Dr. Alan Lazaroff, one of its founders. The pursuit of higher returns changed that, he said.

“It doesn’t seem right to me that you could convert this into a profit-making machine on these frail elderly people’s backs,” said Lazaroff, who resigned from the board after disagreements with CEO Maureen Hewitt, who took the top job in 2007.

Sarah Rasmussen, a spokeswoman for InnovAge, said the company couldn’t comment on “active legal proceedings.”

“The health and well-being of our participants is our top priority and we continue to actively work with regulatory agencies to ensure we fully address any audit findings,” she said.

Client went without insulin, wound care

Almost all of InnovAge’s business comes from PACE, though it also has senior housing complexes in Aurora and Thornton. It runs six centers in Colorado, where participants go for most medical services and participate in social activities.

The company is also required to provide any home care services that clients need, such as help with housekeeping, blood sugar checks for people with diabetes, and assistance getting up and dressed for those with limited mobility.

InnovAge is the only PACE provider for Adams, Arapahoe, Broomfield, Denver, Jefferson, Larimer and Pueblo counties. It also serves part of Weld County. Each PACE provider is authorized to serve certain zip codes, so people who live in InnovAge’s territory don’t have the option to choose a different organization.

It also operates centers in California, New Mexico, Pennsylvania and Virginia, though Colorado is its biggest market.

Over the past two years, federal inspectors found lapses in care at InnovAge’s Denver PACE center. All elder providers have to undergo routine inspections to keep serving Medicare and Medicaid patients, and the state or the Centers for Medicare and Medicaid Services can come in if clients allege they didn’t get services or were mistreated.

A July 2020 inspection, in response to a complaint, found a client with diabetes didn’t routinely get home care and went without insulin injections and blood sugar checks on 14 days over the course of three months. People with diabetes are at risk for complications of high or low blood sugar if they don’t get regular tests, though the inspector didn’t note any harm to the client.

The same client went without care for a toe wound, which led to the wound growing over time. The care plan said a home health provider was supposed to change the dressing on the wound every other day, but records showed the client didn’t receive those services for 17 days straight, and then again for 14 days, and finally for a 28-day stretch. Diabetes impairs wound healing, and people who don’t receive proper care are at risk for amputations.

A routine inspection, in July 2021, found some clients who relied on InnovAge’s home health providers for help getting in and out of bed had to either spend much more time in bed than they wanted to, or go without that service altogether. One woman didn’t want to go to bed until 7 p.m., but was told the latest available appointment to lay her down was at 5 p.m., so she resorted to sleeping in her wheelchair. Since she couldn’t elevate her legs in the wheelchair, as she would have in bed, her leg swelling worsened.

A different client reported she routinely spent 16 hours in bed because staff might not get her up until 9:30 a.m. or even 11 a.m., and put her back to bed anywhere between 1:30 p.m. and 3 p.m. She told the inspector she felt like “I’m in prison,” because she was left in bed with the curtains closed for such long periods.

The inspectors also noted a client who had broken both hips wasn’t offered physical therapy or additional help with housekeeping; a woman who reported she couldn’t see well enough to give herself insulin was left to do it on her own for months; and nurses didn’t take effective steps to heal wounds on two other clients’ legs and feet.

A lawsuit filed by investors in October quoted Shelbie Engelking, Colorado’s PACE ombudsman, saying her office had received frequent complaints from InnovAge clients and their families about a lack of access to certain services, such as podiatry and dental care.

The ombudsman’s office declined to comment for this article, citing a policy of not discussing specific companies.

Carolyn Sanders, who attended the Pueblo medical and social center until recently, said she didn’t experience care lapses on that scale, but encountered a litany of frustrations, from being left behind when the bus took everyone home to waiting six weeks for an injection her orthopedist had ordered.

She said the InnovAge social worker assigned to her case didn’t return messages, and only got in touch when it was time for the twice-yearly care reviews.

“Finally I got so fed up, I had to quit,” she said, adding that she was more satisfied coordinating her own medical care outside PACE.

Not all clients have that option, however, because more than half of PACE participants nationwide have dementia.

“The toughest patients you’ve ever seen”

Dr. Mary Fairbanks, who worked for InnovAge from 2010 to 2018, said she started off with four eight-hour days and one on-call shift, and by the end was working 14- to 16-hour days. InnovAge was struggling to retain staff, she said, and doctors were being asked to do tasks that nurses or medical assistants would normally handle, in addition to their regular duties.

“InnovAge completely burned me out,” she said. “It was the hardest job I’ve ever had, hours-wise.”

Fairbanks estimated her patient load roughly doubled over those eight years, from 180 to 360 at a time. Doctors serving the general population typically have several times that number of patients assigned to them, but if many of their patients are generally healthy, they may only see them for short visits a few times a year. PACE participants require more visits and more attention each time they come in, Fairbanks said, referencing one person who was on 35 medications.

“These are the toughest patients you’ve ever seen,” she said.

The center in Lakewood where she worked kept recruiting more patients, even though staffing couldn’t keep up, Fairbanks said. She said Hewitt, who was CEO at the time, was relentlessly focused on growth.

“She kept using the phrase, ‘We want to be too big to fail,’” Fairbanks said. “Didn’t we learn anything from Enron? No one’s too big to fail.”

Hewitt resigned in January. An attorney representing her in the investor lawsuit declined to comment for this story.

Toward the end of her time there, Fairbanks said she noticed a trend of enrolling people who were homeless and rarely came in for services. InnovAge still got paid for those clients for at least six months, because PACE providers aren’t allowed to disenroll people without a lengthy process, she said.

The investor lawsuit included accounts from three Colorado employees — a former medical director, a center director and a physician — who confirmed InnovAge had worked with nonprofits serving homeless people to visit shelters and motels and enroll them in PACE, even though Medicare required participants to have stable housing. The physician, who was based in Thornton, said in the lawsuit that InnovAge had “no chance” of providing the expected level of service to homeless clients, but got paid as if it had.

The Colorado employees, and three who worked at California centers, weren’t named in the lawsuit.

The lawsuit also quoted the Colorado employees saying clients weren’t getting specialist care because InnovAge didn’t have contracts with doctors outside its practice, and that some patients waited six months or longer for referrals.

Beth Beery, who worked at InnovAge as an occupational therapist from 2006 to 2018, said it was a “dream job” until about 2011, when caseloads increased and new procedures started delaying care. She acknowledged a time clock mistake before she was fired, but believes that voicing concerns about care was the real issue behind her termination.

New procedures delayed installing equipment like grab bars and shower chairs, which they previously could buy at Walmart and install the same day, Beery said. Not having that equipment could put patients at risk for falls and injuries, she said.

Another former occupational therapist, who spoke on the condition of anonymity over concerns about being blacklisted in the industry, said she was “thrilled” to get the job in 2008, but it had changed by the time she was let go in 2014. She said she believed she was put on unpaid leave after sending a letter raising concerns, because she hadn’t gotten a termination letter, only to realize she’d been fired when her final paycheck arrived.

Initially, the Lakewood center where she worked had about 300 clients, who could drop in for day services any time they liked, the occupational therapist said. Gradually, that increased to 700, and people whose needs were less severe could only come in two or three times a week. Toward the end of her time, it could take up to two weeks to get adaptive equipment authorized and installed, she said.

“When these people need a raised toilet seat, you don’t wait two weeks,” she said.

PACE requires home checks twice a year, the occupational therapist said, but the center cut back to once a year as the client list grew. The home visits look for potential hazards that could cause the client to fall, and for ways that their home might no longer meet their needs.

“We couldn’t get to our patients and get them what they deserved and they were promised,” she said.

Growth backfired as states investigated

The kind of care that came to define PACE started with a few sites in California and proved wraparound services could be cost-effective for Medicare and give clients more of what they wanted, Lazaroff said.

He was one of the founders of Total Longterm Care, the first site to try to replicate the California model in Colorado in the late 1980s, and was a member of its board for about 20 years. It was renamed InnovAge in 2012 after multiple PACE programs merged.

Geriatrics was a relatively new field at the time, and before those sites opened, there was a lack of resources for people who were in the last years of their lives but wanted to keep living at home, Lazaroff said.

Patients “had figured out they weren’t going to live forever. What they wanted was to be independent, not to be a burden on other people and especially not to go into a nursing home,” he said. “We couldn’t do it, because there weren’t resources.”

PACE programs were never especially profitable, but the organization kept slowly growing over the years, Lazaroff said. But the mission changed to focus more on expansion and profit after Hewitt became CEO, he said. He left within about a year of the leadership change.

Dr. Willie Orr, another co-founder, said Hewitt pushed him out by asking him to leave his medical director position for a new role, then eliminated that job about six months later.

Much of the health system overtreats people because doctors and hospitals get paid for every service provided, but InnovAge started to go to the other extreme, where patients couldn’t get specialized care when they needed it, he said.

“They took something that has tremendous potential and tremendous benefits… and corrupted it,” he said. “This is an aberration in who PACE is and what PACE does.”

There’s always a tension between growing enough to keep a social services agency afloat, while not taking on more than you can handle, said a former social worker who was employed for about 12 years at Total Longterm Care and spoke on the condition of anonymity because her current employer wouldn’t allow her to speak on the subject. She said she felt management balanced that well initially, but that growth began to take precedence under Hewitt.

Executives were focused on buying smaller Colorado agencies that were tottering financially, as well as expanding into other states — especially California, the social worker said. It didn’t increase the number of staff accordingly, though, and social workers’ caseloads more than doubled by the time she left in 2012.

Morale dropped when Orr and Lazaroff were pushed out, and social workers who fought for their clients to get services were accused of not being “team players,” she said.

“It’s almost like I was a bad employee for doing my job and advocating,” she said.

Until 2015, PACE providers had to be nonprofits. About a year after the Centers for Medicare and Medicaid Services changed that rule, InnovAge converted to a for-profit company and got a substantial infusion of private equity funding. Federal and state governments spend an average of $94,000 for each PACE participant — a significant sum, but less than it would cost to place them in nursing homes.

A study after the change found for-profit PACE programs didn’t produce worse outcomes than nonprofit ones, said Robert Greenwood, senior vice president of communications for the National PACE Association. Most programs have had some struggles to hire enough staff to care for the growing number of people who are interested in aging at home, though they aren’t in as tight a spot as nursing homes, because they can offer more-regular hours, he said.

Nationwide, InnovAge doubled its enrollment between 2016 and 2021, mostly by purchasing nonprofit PACE programs in multiple states, according to MarketWatch. Its revenues more than doubled, and in May 2019, it paid about $66 million in dividends to shareholders.

Most state Medicaid programs pay a fixed rate for PACE clients, and Medicare attempts to adjust for how sick each client is, Greenwood said. That’s meant to cover all of each client’s medical needs, including hospitalizations and nursing home stays, which gives the provider an incentive to keep participants healthy, he said.

“We think of PACE as a self-correcting model,” he said. “The care goals and the financial goals align so well.”

Lazaroff said he doesn’t think the built-in incentives are enough to guarantee quality, though. The easiest way to increase profits in the PACE program is to enroll more people, provide them as few services as possible and try to disenroll them when their needs are too great, he said.

“If you don’t spend a lot of that $7,000, $8,000 (per client per month), you can make a very good return,” he said. “I don’t see how you can take care of these high-needs people… and make the kind of returns that are attractive to Wall Street.”

A whistleblower based in California alleged in a 2019 lawsuit in federal court that InnovAge was pushing out more expensive clients. An inspection of the Denver PACE center also found evidence that at least some participants had been told they should disenroll in the program and consider nursing home care — which would allow InnovAge to get out of paying for more expensive care for those clients. It wasn’t clear how widespread the problem was, though.

The whistleblower complaint, filed by a former executive in InnovAge’s western region, also alleged InnovAge routinely denied clients medically necessary services, but billed Medicare and Medicaid as if those services had been scheduled — allegedly defrauding the government. The executive also said the company had delayed medication deliveries and told her to deceive federal officials who wanted to see signs of improvement.

Management never said to be as aggressive as possible in billing so they could maximize revenue, but gave that impression, said a former employee in Colorado who quit because she was uncomfortable with InnovAge’s practices. She spoke on the condition of anonymity because of concerns about future employment prospects in the field.

For example, if a client was hospitalized for sepsis, the billing code stayed in their chart after they were released, meaning the patient looked sicker and InnovAge got paid more, the former employee said. Sepsis is a life-threatening reaction to an infection, which can cause multiple organs to shut down — it’s not the sort of condition you live with long-term.

“It’s really no longer sepsis, or they’d still be in that hospital,” she said. “It was stretching.”

The whistleblower complaint was dropped after the federal government decided not to intervene, and InnovAge went public with its first sale on the stock market in March 2021. By mid-March, the company was valued at $3.5 billion.

Before the end of the month, however, the Colorado Department of Health Care Policy and Finance notified InnovAge that it was looking into complaints the company’s Thornton center was understaffed and that clients had experienced preventable harm, like infections after surgery and dangerous blood clots.

The Thornton physician quoted anonymously in the investor lawsuit said the facility didn’t have enough schedulers to handle the volume of clients, and each doctor was responsible for about twice as many patients as the national average for PACE.

The Centers for Medicare and Medicaid Services suspended InnovAge’s Sacramento offices in September 2021, meaning they couldn’t take new clients insured by Medicare. Later that month, the company disclosed to investors that it had paid back more than $13 million that it shouldn’t have received to Colorado’s Medicaid program, and that Attorney General Phil Weiser had asked for information about its billing as part of an investigation.