Advocacy groups say new nursing home disclosure rules fall short

The federal government has released a new set of rules requiring nursing homes to disclose more information about their corporate ownership and management structure.

The proposed rules haves already been criticized by advocacy groups for not requiring more in the way of disclosure.

Nationally, many nursing homes are owned by groups of out-of-state investors who have formed limited liability corporations to operate each of their facilities. Unlike other types of corporations that publicly disclose the names of their officers, limited liability corporations typically don’t disclose the names of the individuals behind them.

Some of the facility owners are directly affiliated with other for-profit vendors that sell their services — such as management, staffing and resident therapy — to the care facilities. Such relationships have long been criticized as undermining efforts to lower costs since they provide a financial incentive for owners to move more money from the taxpayer-supported care facilities into the coffers of their self-owned affiliates.

For example, over a three-year period, the nursing home chain Life Care Centers reported $1.2 billion in payments to various companies for management, staffing companies, insurance and therapy. All of those companies are owned or controlled by Life Care.

Earlier this year, the National Consumer Voice for Quality Long-Term Care reported that many care facilities’ payments to their for-profit affiliates greatly exceed the cost of the actual services provided by those affiliates. The organization noted that while the nursing home chain Pruitt Health reported to the government related-party costs of nearly $482 million over three years, it paid those same affiliates $570 million.

The new rule requires that Medicaid-funded nursing homes must disclose to the Centers for Medicare and Medicaid Services or state regulators the following information:

— The names and titles of each member of the facility’s governing body.

— The names and titles of each person who serves as an officer, director, member, partner, trustee or managing employee of the facility.

— The organizational structure of each so-called “disclosable party” of the facility, along with a description of the relationship those parties have to the facility and to each other. “Disclosable parties” are defined as individuals who lease or sublease property to the facility, or who own at least 5 percent of the real estate, as well as individuals who provide management or administrative services, clinical consulting services, or accounting and financial services to the care facility.

Although the rule requires the reporting of such information to regulators, the federal government has up to one year to make the information available to the public.

Timeliness and accuracy of data questioned

Because the newly reported data is to be turned over as part of a Medicaid-revalidation process that nurisng homes go through every five years, advocates have complained that care facilities that recently went through that process won’t have to report the required data until 2028. The advocates had asked CMS to require that the data be reported annually, rather every five years, to ensure it isn’t long out of date by the time consumers can access it.

In response to those concerns, CMS has said that while it appreciates the suggestion, “we are concerned about the burden on nursing homes” if annual reporting was required. The agency points out that facilities will be required to voluntarily report any substantive changes in the data that is provided to regulators.

Others suggested that because the new data will be entirely self-reported, CMS should publicly disclose any supporting documentation that is collected to verify the accuracy of the information. The agency rejected that idea, saying only that such information is “generally not made public and we do not intend to do so.”

CMS also rejected calls for fines for failure to comply with the new disclosure requirements, arguing that it retains the power to shut off Medicaid money to a care facility under a variety of circumstances.

With regard to the new disclosure rules, the National Consumer Voice for Quality Long-Term Care said this week that “CMS has taken a step in the right direction to begin to address the problem of the lack of transparency in nursing home ownership, but much more work needs to be done.”

The industry’s primary lobbying organization, the American Health Care Association, told McKnight’s Long-Term Care News that while it supports transparency, “more paperwork reporting will not drive quality. This has become a distraction from the real issues that impact the majority of providers, like Medicaid underfunding and workforce shortages.”

The AHCA said that it wants policymakers “to prioritize investing in our caregivers and this chronically underfunded health care sector.”

Private equity firms tied to resident deaths  

According to the federal government, roughly 70 percent of all nursing homes nationwide are for-profit facilities — a figure that includes private equity companies, which make up roughly 11 percent of all nursing home owners. CMS acknowledges studies that show nursing facility quality has declined when facilities are taken over by private equity companies and similar entities.

One study by the National Bureau of Economic Research concluded that that private equity ownership has increased the short-term mortality of Medicare patients by 10% — suggesting 20,150 lives have been lost due to private-equity ownership over a 12-year period.

A study published in the Journal of the American Medical Association reached similar conclusions, noting that private equity companies seek annual returns of 20% or more, which can result in increased pressure to generate short-term profits through staffing reductions and cuts in services and supplies.

In January 2023, the U.S. Government Accountability Office issued a report that said CMS’ Care Compare website, created to provide consumers with detailed information on nursing homes, “does not allow consumers to easily identify relationships and patterns related to quality across nursing homes under common ownership. For example, while owner names are listed, there is no way to easily identify what other nursing homes might have the same owner or to allow the consumer to examine quality or other patterns at nursing homes under common ownership.”

The GAO called on CMS to provide on its website “a user-friendly list of all nursing homes under common ownership, along with information on their quality ratings, (which) would allow consumers to observe patterns in quality across facilities with common ownership.” CMS has yet to provide such lists to the public.