Scroll down for Attorney General Campbell media advisory and letter, also on this topic.
DignityMA submits testimony in response to Disclosures of Ownership and Additional Disclosable Parties Information for Skilled Nursing Facilities and Nursing Facilities
A Proposed Rule by the Centers for Medicare & Medicaid Services (CMS): Disclosures of Ownership and Additional Disclosable Parties Information for Skilled Nursing Facilities and Nursing Facilities
File code: CMS-6084-P
April 13, 2023
Dear Sir/Madam:
Dignity Alliance Massachusetts (Dignity Alliance) submits this testimony in response to Disclosures of Ownership and Additional Disclosable Parties Information for Skilled Nursing Facilities and Nursing Facilities, File code: CMS-6084-P. Dignity Alliance is a broad-based group representing a wide range of stakeholders dedicated to transformative change to ensure the dignity of older adults, people with disabilities, and caregivers. We are committed to advancing new ways of providing long-term services, support, living options, and care while respecting choice and self-determination. Dignity Alliance works through education, legislation, regulatory reform, and legal strategies for this mission to become reality throughout the Commonwealth.
Dignity Alliance strongly supports consumers having access to reliable and relevant ownership information for individual nursing homes, including care quality information for all nursing homes under common ownership. It is currently impossible to easily access care quality information across nursing homes with common owners. Further, until CMS ensures that ownership information for all nursing homes is accurate, the system’s utility, as a whole, is undermined. We applaud the Secretary for taking this necessary step to achieve ownership transparency.
On 2/3/23, the Government Accountability Office (GAO) released this report, “Nursing Homes: CMS Should Make Ownership Information More Transparent for Consumers,” which faulted CMS on how it currently provides information to consumers regarding nursing home ownership. The report noted that ample evidence demonstrated that different ownership types often lead to disparate health outcomes for nursing home residents. For instance, non-profit homes generally perform better on measures of quality than for-profit nursing homes. The GAO report acknowledged these differences in care quality and emphasized the importance of accurate and accessible ownership interests to consumers.
The report’s primary focus was on how CMS provides ownership information on its Care Compare website. Echoing concerns of advocates across the country, the GAO report found that CMS:
- Was not providing information in plain language with clear graphics. For instance, the GAO noted terms such as “5% owners or greater indirect ownership interest” and “operational/managerial control.” These terms are vague and undefined and not easily understandable to consumers.
- Failed to organize information to highlight patterns. The GAO report found that “the presentation of ownership information on Care Compare does not allow consumers to easily identify relationships and patterns related to quality across nursing homes under common ownership.”
- Did not explain the purpose and value of ownership information on Care Compare. Nowhere on Care Compare is there an explanation of how the type of ownership may result in worse care. This absence of an explanation may result in consumers overlooking its importance.
- Did not disclose the key strengths and limitations of the data. This failure is significant because, as noted by the GAO, nursing home ownership data is often incomplete and inaccurate. CMS admitted in the report that the ownership structures for some nursing homes are so nebulous that they are sometimes unable to ascertain who owns a nursing home. Despite this fact, CMS does not disclose the unreliability of the data to the public on Care Compare.
The GAO report made two recommendations, and CMS concurred with both recommendations:
- Use plain language to define key terms in the ownership section of Care Compare.
- Organize ownership information by providing consumers easy access to a list of all facilities under common ownership, their respective star ratings, and a distribution of star ratings across nursing homes with common ownership to allow consumers to examine quality patterns across such facilities.
Additionally, the Biden Administration announced last year that it would address the issue of inaccurate and incomplete ownership information and take steps to make ownership data available to consumers. The GAO report noted that CMS had taken some steps to release more ownership data, but CMS noted that this data was for researchers and not consumers. However, with this proposed rule, CMS is fulfilling its promise of additional action to ensure ownership data access to residents and their families. This is critically important to all seeking nursing homes providing quality care, and we commend CMS for this vital proposal.
We also recommend the following edits to proposed §424.502 definitions [i] to ensure all potential owners are vetted. Much pain and suffering can be caused by unscrupulous owners and management, making it necessary to vet all potential owners and decision-makers in order to protect nursing home residents. The additional time it would take to vet all acquiring or managing a nursing home is well worth the benefit of eliminating the pain, fear, and suffering to a nursing home resident from devious or incompetent owners and managers.
Based on the reasons noted below, we recommend expanding the definitions of the following potential nursing home owners as follows:
- “owner”: delete “ownership interests of 5 percent” and insert “any ownership interest”.
- “organizational structure.” Retain definitions, except for the following edits:
- For a corporation—The officers, directors, and shareholders of the corporation who have any ownership interest in the corporation
which is equal to or exceeds 5 percent; - For a limited partnership—The general partners and any limited partners of the limited partnership
who have an ownership interest in the limited partnership which is equal to or exceeds 10 percent.
Background to recommended changes for “owner” and “organizational structure”:
- The New York Attorney General Investigation of nursing home financial fraud and self-dealing that led to severe understaffing, resident neglect, and harm, revealed fraudulent activity by one (1) percent owners. [ii]
- In May 2019 [iii] as a safeguard against corrupt applicants, Kansas revised its licensure application requirements to include review of any percentage of ownership the applicant had or has in the operations or the real property of a nursing home. This tightening of application requirements was due to the devastating impact from the bankruptcy closure of 15 Kansas nursing homes owned by Skyline.
- MA residents also suffered from the bankruptcy closure of 5 Skyline nursing homes. And prior to Skyline, to fend off creditors and repeated fines for resident deaths and injuries, Synergy was forced to close 2 MA nursing homes and sell its other 9 properties by a court-ordered receiver. Synergy facilities in MA were licensed to care for about 1,200 residents. [iv]
- It is also important to consider the negative impact from related party financial transactions that can drain a facility’s precious funds to benefit “hidden” owners, instead of nursing home residents. The recently published Where do the Billions of Dollars Go? A Look at Nursing Home Related Party Transactions. by the National Consumer Voice for Quality Long-Term Care, provides an in-depth review of these issues and also requires further consideration by CMS.
Nursing home residents deserve to live their lives with dignity. We urge you to support the Administration’s proposals for requiring staffing standards in nursing homes, and holding owners and operators accountable for the quality of care they provide and how they spend public dollars. This is essential for ensuring that nursing home residents receive the care they need and deserve.
Paul Lanzikos, paul.lanzikos@gmail.com
for DIGNITY ALLIANCE MASSACHUSETTS
35 High Street, Beverly, MA 01915, info@DignityAllianceMA.org
i. …Third, we propose to define “organizational structure.” It would mirror the definition of the same term in section 1124(c)(5)(D) of the Act. With respect to a SNF, it would mean
- For a corporation—The officers, directors, and shareholders of the corporation who have an ownership interest in the corporation which is equal to or exceeds 5 percent;
- For a limited liability company—The members and managers of the limited liability company including, as applicable, what percentage each member and manager has of the ownership interest in the limited liability company;
- For a general partnership—The partners of the general partnership;
- For a limited partnership—The general partners and any limited partners of the limited partnership who have an ownership interest in the limited partnership which is equal to or exceeds 10 percent;
- For a trust—The trustees of the trust;
- For an individual—Contact information for the individual…”
iii. http://www.kslegislature.org/li_2020/b2019_20/measures/documents/sb15_enrolled.pdf
Page 19, Sec. 27. K.S.A. 2018 Supp. 39-927 is hereby amended to read as follows: 39-927. (a) An application for a license to operate an adult care home shall be made in writing to the licensing agency upon forms provided by it the licensing agency and shall be in such form and shall contain such information as the licensing agency shall require, which may include if applicable: “…(1) A detailed projected budget for the first 12 months of operation, prepared in accordance with generally accepted accounting principles and certified by the principal officer of the applicant, accompanied by evidence of access to a sufficient amount of working capital required to operate the adult care home in accordance with the budget, in the form of cash on deposit, a line of credit, applicant’s equity, or any combination thereof; (2) a list of each current or previously licensed facility in Kansas or any other state, territory or country or the District of Columbia in which the applicant has or previously had any percentage of ownership in the operations or the real property of the facility; and…”
AG Campbell Co-Leads Letter Calling for Increased Disclosure and Transparency of Nursing Home Ownership and Management
State Attorneys General Call on U.S. To Require Disclosure of Nursing Home Ownership and Management To Address Growth of Private Equity and Real Estate Firms in Industry
BOSTON — Massachusetts Attorney General Andrea Joy Campbell and New York Attorney General Letitia James are co-leading a coalition of 18 state Attorneys General and the Inspector General of Washington D.C. in support of a proposed rule by the U.S. Department of Health and Human Services and the Centers for Medicare and Medicaid Services (CMS) that would require the disclosure of certain ownership, managerial, and other information regarding nursing facilities, particularly from private equity investors and real estate investment trusts.
The letter, submitted on Friday by the coalition, supports a proposal by CMS to require nursing facilities and their owners to disclose the true decision makers exercising control over nursing facilities’ operations. The coalition contends that such disclosure would improve the ability of state Attorneys General and their Medicaid Fraud Control Units (MFCUs) to hold bad actors accountable for providing substandard care in nursing facilities.
“When actors in the nursing home industry put profits first at the expense of people’s health and well-being, the public deserves to know who they are,” said AG Campbell. “I’m proud to join my colleagues from across the country in support of these common-sense rules to improve transparency and accountability.”
State Attorneys General are charged with protecting the safety and well-being of residents of nursing facilities. Their offices, either through Medicaid Fraud Control Units or other units, have authority to investigate and prosecute those responsible for committing abuse or neglect of residents and misappropriation of residents’ funds in these facilities.
The COVID-19 pandemic exposed real concerns about the care provided by many nursing facilities. Over 200,000 nursing facility residents and staff died due to COVID-19 since the start of the pandemic, accounting for at least 23% of all COVID-19 deaths in the United States. Recent analyses have found that, for every two victims of COVID-19 in nursing facilities, there was another resident who died prematurely of other causes. The coalition of Attorneys General assert that these tragic outcomes are often reflective of facilities that are chronically understaffed resulting in the failure to provide basic support to residents, including hygiene, wound care, feeding, and hydration.
In a case last year dealing with tragic outcomes like these, the Massachusetts AG’s Office entered into a settlement agreement with a chain of nursing facilities to resolve a series of allegations, including that the company failed to meet the needs of nursing home residents experiencing substance use disorder. The AG’s Office alleged that understaffing and under-resourcing at these facilities led to the deaths of several long-term care residents by overdose.
In their letter, the AGs note that the quality of care delivered by nursing facilities operated on a for-profit basis, particularly when those for-profit owners and/or operators include private equity investors, is often worse than at non-profit nursing facilities. A recent study found that nursing facilities with private equity ownership had increases of short-term mortality by 10%; this study also found worsening mobility of residents, declines in nurse availability per resident, and elevated use of antipsychotic medications in nursing facilities owned by private equity.
As part of efforts to hold private equity investors accountable, in 2021, the Massachusetts AG’s office negotiated a precedent-setting settlement in which a private equity firm and former executives of South Bay Mental Health Center agreed to pay $25 million for fraudulently billing Massachusetts for mental health care services provided to patients by unlicensed, unqualified, and improperly supervised staff members at clinics across the state.
The AGs’ letter further points out that corporate owners and operators, especially private equity investors and real estate investment trusts, continue to structure acquisitions of nursing facilities to avoid disclosing to CMS the extent of their ownership or involvement in the facilities’ operations. This lack of transparency hampers and delays law enforcement efforts from identifying the true decision makers at nursing facilities—who may be responsible for the root causes of substandard care.
Joining AG Campbell and AG James in the letter supporting the CMS proposed rule are the Attorneys General of Arizona, California, Delaware, Hawaii, Maine, Maryland, Michigan, Minnesota, New Hampshire, New Jersey, New Mexico, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington.