ACP, Others Increase Calls for More Transparency of Nursing Home Ownership

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CMS proposed rule would require Medicare skilled nursing facilities and Medicaid nursing facilities to report ownership and management data

April 7, 2023 (ACP) — Growing numbers of nursing homes are now owned and run by private equity firms, but this for-profit model can increase short-term mortality for patients, increase costs and lower the patient-nurse ratio.

The American College of Physicians has been calling for greater transparency to help protect nursing home residents' health and well-being and hold owners more accountable for the quality of care, as laid out in a position paper on the issue in August 2022.

ACP recently weighed in on a Centers for Medicare & Medicaid Services (CMS) proposed rule that would require Medicare skilled nursing facilities and Medicaid nursing facilities to report ownership and management data to CMS. The proposed rule is part of a Biden-Harris administration initiative to improve care and accountability at such facilities. In addition to ACP, the National Academies of Medicine, the Government Accountability Office and others have called for more transparency in nursing home ownership.

This is a significant issue, and time is of the essence, said Ryan Crowley, ACP senior associate for health policy.

“Our country's population over age 65 is projected to increase by over 15 million between 2020 and 2030, and these individuals will need a system of long-term care services and supports they can rely on,” Dr. Ryan D. Mire, ACP president, said in a statement.

“Most nursing homes are owned by for-profit companies, which tend to have lower quality and patient satisfaction outcomes than nonprofit facilities,” Crowley said. In California, for example, for-profit nursing homes had higher COVID-19 case rates than nonprofit and government-owned facilities. In addition, a 2021 study revealed that private-equity ownership of nursing homes is associated with a 10 percent increase in short-term mortality of Medicare patients.

“Transparency is important because the public should know who's accountable when something goes wrong,” Crowley said. “Companies that own nursing homes may also provide laundry, food and other services for the facility, and more transparency will help determine whether a conflict of interest is leading to higher costs or lower quality of care.”

Such transparency could help ensure that facilities conduct thorough background checks when they hire staff. Most importantly, transparency will make it easier for patients and their families to determine if a facility provides high-quality care, Crowley said, adding that this will go a long way toward helping these families find peace of mind.

Under the new proposed rule, nursing homes would have to submit additional information to CMS. “For example, an owner of a skilled nursing facility that participates in Medicare would have to disclose whether they are a private equity company or a real estate investment trust,” Crowley said.

The new proposed rule is a good start. “ACP has called for other improvements to the long-term services and support sector, including minimum nurse staffing standards for nursing homes,” he added.

ACP also wants nursing homes to report detailed ownership and financial information, including data for private equity investors, real estate firms, management companies and other related parties. Moreover, Crowley added, the U.S. Department of Health and Human Services should audit ownership and financial information to ensure accuracy.

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Back to the April 7, 2023 issue of ACP Advocate