The attorneys general from a diverse group of states have thrown their support behind a federal proposal to increase public reporting of nursing home ownership and related party information, saying the current reporting standard “hampers law enforcement efforts to address substandard care.”
The 18 AGs, all considered the chief law enforcement officials for their states, expressed support for the transparency rule in a letter to Centers for Medicare & Medicaid Services Administrator Chiquita Brooks-LaSure. The letter, publicized this week, was submitted on April 14, ahead of the end of the rule’s formal comment period.
The effort was led by New York Attorney General Letitia James and Massachusetts Attorney General Andrea Joy Campbell and co-signed by the AGs in Arizona, California, Delaware, Hawaii, Maine, Maryland, Michigan, Minnesota, New Hampshire, New Jersey, New Mexico, Oregon, Pennsylvania, Rhode Island, Vermont and Washington.
The letter outlined recent enforcement efforts several states’ Medicaid Fraud Control Units have undertaken against nursing homes, citing the challenge of identifying and holding accountable those owners whose roles or financial interest had been concealed from the public.
“Under existing CMS regulations, corporate owners and operators, especially private equity investors, REITs, and similar arrangements between facilities and purported investors, continue to structure acquisitions of nursing facilities to avoid disclosure of the extent of their ownership or involvement in the facilities’ operations,” the attorneys general wrote.
“This lack of disclosure hampers law enforcement efforts to address substandard care by preventing MFCUs and Attorneys General, as well as other enforcement agencies, from identifying the true decision makers at nursing facilities — who may be responsible for the root causes of that substandard care — without considerable expenditure of public resources through investigative efforts and/or discovery.”
By requiring owners and facilities to automatically disclose more information, CMS would enable state-level agencies to use their resources more efficiently and better understand working relationships of various owners and entities.
As proposed in February, the latest transparency rule would define private equity and real estate investment trusts, which regulators said would set the stage for the disclosure of whether those types of owners or investors play a role in a specific nursing home.
The proposed rule would use part of the Affordable Care Act to require nursing homes enrolled in Medicare or Medicaid — the vast majority of US nursing homes — to disclose individuals or entities such as management firms that provide administrative services or clinical consulting services to the nursing homes.
“CMS is committed to using every tool at our disposal to improve nursing home care and identify trends that enhance residents’ quality of life,” Brooks-LaSure said when the rule was proposed. “If finalized, this rule would strengthen our ability to examine ownership types, including private equity and real estate investment trusts.”
Still, industry watchers have cautioned that laborious reporting requirements could create a stumbling block for a sector in desperate need of private capital.
Mark Parkinson, president and CEO of the American Health Care Association, has called the agency’s focus on private equity ownership “a red herring,” noting that such investors are involved in less than 5% of nursing homes. REITs account for about 12%, but Parkinson has said they typically have no influence on daily operations.