A review of the Lake Worth Nursing Home identified 14 residents who did not appear to meet the "medical necessity" definition required for long-term care under Medicaid, according to a state report.
The findings mean that the state could stop reimbursing the facility for those patients or try to recoup past payments, said Geoff Wool, spokesman for the Texas Health and Human Services Commission.
The state review was a response to community concerns and media reports about the number of parolees and sex offenders living at the facility, and questions about whether they all required long-term care.
Henry Adams, a spokesman for the nursing home, said Friday that the facility stands by its assessment of residents' conditions.
"We do the assessments, send the information into the state, and they make the determination on medical necessity," Adams said. "The information we submitted was correct."
Officials with the Texas Department of Criminal Justice have said they refer parolees to the 65-resident facility because few others accept them. In April, about 30 residents were on some form of supervision, the officials said.
The state sex offender registry showed 27 sex offenders at the facility's address, though nursing home officials said the true number is closer to 15 to 20.
Several neighbors complained that some nursing home residents appeared to function well physically. In May, a TV news report by the Dallas-Fort Worth Fox affiliate showed some residents walking, biking and, in one case, allegedly drinking beer in a park.
A state utilization review focused on 33 residents and was conducted May 19-20 by the health commission's Office of Inspector General, according to a report released this week.
It found that some residents were "clearly appropriate for nursing home placement," the report said. But 14 did not appear to meet the definition of "medical necessity," a standard required for Medicaid.
"All of those not believed to meet medical necessity were independent in ADLs [activities of daily living] and able to care for themselves without skilled nursing intervention," the report said.
The report noted that two residents met the medical necessity standard on admission but have become functionally independent. Also, it said, two residents who didn't meet the standard had already been transferred.
State officials reviewed medical records, observed residents and interviewed staff during the review.
The commission is sharing the review findings with the Texas Medical and Healthcare Partnership, which administers the Medicaid program, Wool said.
"If they find there were errors in the assessments, then they could take steps to cease payments or recoup payments already made," he said.
The nursing home has received $4.5 million in Medicaid reimbursements for all residents since fiscal 2009, records show.
Dr. Sheila Horsley, medical director at the nursing home, said the facility's assessments are accurate. Some residents have multiple medical conditions, including mental illnesses that are not always apparent in short-term observation, she said.
Some previously lived on the streets or in shelters and would likely land in jail for vagrancy if they were not at the facility, she said.
"A lot of people are ambulatory but confused," Horsley said. "In my opinion, I think these people are clearly disabled, and that's why they are there. I don't know who would care for these people if they weren't here."
State correctional officials are aware of the review at the nursing home, said Jason Clark, spokesman for the Criminal Justice Department. He said has said that while the department refers parolees to nursing homes, it does not determine medical necessity. Assessments are left to the facilities.
Clark wrote in an e-mail Friday that "TDCJ is working with HHSC to review the information and will determine what steps to take in referring offenders to this nursing home."
Alex Branch, 817-390-7689