A new consumer advocacy report is calling on the Centers for Medicare & Medicaid Services to increase its scrutiny of nursing homes and their business dealings with related-party companies.
The National Consumer Voice for Quality Long-Term Care expressed concern Tuesday that CMS’ current oversight is inadequate to catch any potential instances of nursing homes charging inflated service rates to their own facilities through related parties that they also own.
The group’s report claims that as many as 75% of nursing homes currently use related-party transactions. While acknowledging that CMS requires facilities to disclose these transactions, the advocacy group claimed that some related-party payments far exceed allowed Medicare costs and that CMS is not fulfilling its obligation to ensure effective use of public money.
“it is not apparent that CMS is auditing these costs,” the report said. “Nor does it appear that they are requiring nursing homes to reimburse the federal government for these excess payments.”
The advocacy group is calling for consolidated cost reporting at the federal level; for a greater number of routine and targeted audits of nursing homes that use related parties; and for more investigation into whether related-party costs are “prudent.”
LTC leaders respond
Provider leaders responded to the report by noting that related-party deals are common in multiple industries, that they help minimize costs in long-term care and that the sector already supports transparency and provides significant financial data to CMS.
“Many of the third-party businesses that long term care owners embark on can help streamline services for residents,” a representative of the American Health Care Association told McKnight’s. “There’s also no evidence that related parties are charging nursing homes differently in comparison to non-related parties.”
The AHCA statement claimed that related parties help the struggling sector stay afloat in a system where nursing home funding has often been neglected by policymakers.
Some nursing homes have come under fire from regulators in recent years for their related-party transactions. However, a few bad actors should not be used to justify painting the entire sector with a broad brush or suggest that they are not interested in transparency, according to Katie Smith-Sloan president and CEO of LeadingAge.
“The sector is not homogenous,” she told McKnight’s Thursday. “Our nonprofit nursing home members are driven by their missions and disclose ownership as required by federal tax law on Form 990s that are open to public inspection. This kind of clarity of motive and transparency of finances help to distinguish ethical operators from bad actors. It’s important to know how money flows to ensure what we do have goes to where it is needed. Nonprofits funnel money toward quality care, not lining pockets.”
Consumer Voice argued that additional oversight would provide necessary clarity for skilled nursing residents and their families.
“Increased transparency and accountability in nursing home cost reporting would shine a light on how nursing home owners and operators spend taxpayer dollars and would better ensure that the money is used for resident care and safety,” according to the report.
While CMS is now being called on to increase oversight of the long-term care sector, the federal agency has already put additional pressure on nursing homes this year. Notably, it finalized a transparency rule in November requiring more details from nursing homes about their ownership structure.
