A group of individuals with ties to the nursing home industry recently published a commentary in the journal Health Affairs and opined that complex ownership structures used by many nursing home operators make it difficult to assess nursing home finances and performance. The article, entitled “These Administrative Actions Would Improve Nursing Home Ownership And Financial Transparency In The Post COVID-19 Period,” notes that complex nursing home ownership structures make it difficult for policymakers to properly oversee how nursing homes spend Medicare and Medicaid payments.
The authors highlight the increase in complex nursing home ownership arrangements. Additionally, the authors note that many nursing facilities separate their operating companies from their property companies in an effort to “shield parent companies from liability and reduce regulatory oversight.” The commentary also accuses corporations of hiding profits in related-party transactions, such as management services, nursing and therapy services, and lease agreements and loans.
The commentary acknowledges prior government efforts to increase ownership transparency as a result of legislation that was incorporated in the Affordable Care Act (ACA) in Section 6101, but notes that CMS has not established a mechanism to audit the accuracy and completeness of the information reported by nursing homes. The commentary also accuses the federal government of failing to review ownership changes, using Skyline Healthcare as the example whereby the company collapsed and was allowed to purchase and operate more than 100 facilities in 11 states. The authors note that the federal government does not have specific quality and financial standards for approving changes in ownership.
The commentary also notes that CMS lacks oversight of nursing home chains as a whole and instead, focuses on individual facilities. The authors note that while the “Department of Health and Human Services (HHS) Office of Inspector General uses corporate integrity agreements to address fraud and worthless services provided by nursing home chains…. owners are rarely removed from participating in Medicare and Medicaid.”
The group also criticized Medicare cost report data and noted that it is seldom audited and penalties and are not imposed for providers that fail to report.
The recommendations provided by the group include the following:
The authors note that President Joe Biden has already proposed measures that would require audits of nursing home cost reports and ownership data. The full text of the commentary is available here.