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Nursing home ownership data from the Centers for Medicare & Medicaid services currently captures only a small fraction of private equity and real estate investment trust investment in long-term care, according to the results from a new study in Health Affairs.

The researchers confirmed that, despite pushes for more ownership transparency under the Biden administration, only 33% of private equity and 17% of REITs were identified by CMS compared to proprietary data from Irving Levin Associates and S&P Capital IQ.

The data also failed to identify what percentage of facilities were owned by investors a majority of the time, regularly making it impossible to parse whether an owner had a small stake in a care facility or owned a majority of it, according to the researchers.

The complexities of the sector mean that consumers and policymakers will struggle to track and understand the impacts of many private transactions and investments within long-term care, according to co-author Tamara Konetzka, PhD, of the University of Chicago.

“It’s really hard data to collect,” Konetzka told McKnight’s Long-Term Care News Monday. “The data has evolved. [CMS is] much better than [it] used to be… but CMS still needs to invest more in collecting accurate and up-to-date information on financial arrangements.”

The study’s authors recommended that CMS require even more financial transparency data collection in the future to close the gap.

“Understanding how investors might be related to one another and unraveling the hierarchy of organizational control to identify the parent entity are critical to enabling policy makers to conduct a more systematic evaluation of ownership by common ownership.” they wrote. “To identify bad actors when approving changes in ownership or management, CMS should also consider any prior violations, the adequacy of financial reserves, and the provision of minimum staffing and adequate quality.

Tracking reimbursements and care quality 

While acknowledging these steps would require more time and financial resources from CMS and from facilities that would theoretically be required to report even more data ownership than current required by the federal regulator, the process could shed invaluable light in two key areas, according to Konetzka.

First, would be the ongoing debate between sector leaders who claim that Medicaid reimbursements are not enough to cover the cost of quality care and consumer advocates who often claim that private owners frequently hide profits in opaque business structures and related-party transactions

“I think we really need accurate data to follow financial flows and think about these ownership arrangements to settle that debate and say either ‘we need adequate Medicaid reimbursements’ or ‘we should discourage certain ownership arrangements that don’t put enough money into patient care,’” Konetzka told McKnight’s. “We just don’t have the data to say all of that.”

The authors highlighted that private equity and REITs make up only about 12% of the sector but also noted that the number is likely to grow and already represents roughly $8 billion in taxpayer funding through Medicare and Medicaid. 

Greater ownership transparency is vital to properly evaluate the sector overall, Konetzka said. More ownership data also will help consumers and policymakers understand care quality within chains and between facilities owned by common private investors.

“For many years, there was a lot of concern that just reporting on the quality of a particular facility doesn’t tell us enough,” she explained, “that maybe if there are certain investors or owners who have a history of providing really poor quality of care that we shouldn’t allow them to acquire or build new facilities and take in more taxpayer dollars.”

Beyond regulatory applications, Konetzka said more information about potential bad actors could help residents and their families avoid facilities that might have red flags for poor care quality in the ownership structure. 

“Consumers have never really had the right tools to look at these larger organizational effects,” she said.

Acknowledging the further resources and education that would be required to gather new data from facilities and compile it for public consumption, the authors called on CMS to keep efficiency and the complexity of the long-term care sector in mind while making any adjustments to their oversight policies.

“It will be important for CMS to streamline the collection of ownership data while simultaneously improving quality by ensuring that the data are timely, flexible, and responsive to the complex and changing nursing home landscape,” they wrote.

Long-term care leaders often note that they already provide a great deal of financial and ownership data to regulators and that facilities’ resources are stretched so thin that further reporting or survey requirements could amount to an oversized regulatory burden.