The identical measures would require nursing homes and any related business entities operating in New Jersey to file consolidated financial statements to be audited at their own expense.

The laws are aimed at curbing a method some industry critics say nursing home owners have used to hide their profits. In related party transactions, nursing home owners may pay well above market rate for rent and management services to third-party companies that are also owned by the same person or group. That makes it hard for state and federal officials to determine owners’ true operating costs. 

Not all agree that these requirements are necessary. Nursing homes already disclose related party transactions and related financial details and have done so for years, according to Andrew Aronson, president and CEO of the Health Care Association of New Jersey.

Consumer advocates cheered the bills on Thursday. Sam Brooks, ​​director of public policy for The National Consumer Voice for Quality Long Term Care, said the long-term care sector would ultimately benefit from states stepping up to fill a gap in transparency. 

“The industry should welcome these reforms,” Brooks told McKnight’s Long-Term Care News. “Just this year, MACPAC issued a report stating that the use of related parties made determining the actual care costs impossible. Increased transparency and accountability could help facilities allegedly struggling to cover costs demonstrate the need for increased funding.”

Brooks emphasized the need for financial accountability, citing a New York Times article that claimed up to 70% of for-profit nursing homes were funneling money through private companies in 2017, leaving $11 billion dollars beyond public scrutiny.

Clarifying finances for policymakers

The bills’ advocates in New Jersey are pushing for a vote in both the state Senate and Assembly by the end of the current legislative session on Jan. 8, according to Laurie Facciarossa-Brewer, New Jersey’s long-term care ombudsman.

“Advocates and regulators need consolidated financial statements to properly evaluate nursing home operations and foster quality care and better conditions for the residents,” Facciarossa-Brewer wrote in an article for northjersey.com. “The current disclosure requirements make it too easy for nursing homes to hide profits and resist calls to improve conditions. We see this clearly when it comes to staffing rules.”

The identical bills would require that new nursing home owners in New Jersey submit applications to the state Department of Health — including, among other details, a list of all parties assuming ownership, an organizational chart disclosing any related entities under the same parties and a consolidated financial statement with a projection of profits or losses for the next three years.

Transparency at a high cost

Without objecting to greater transparency in principle, association leaders in the state sounded the alarm over the additional regulatory burden the requirements could place on providers.

“The issue that we have with the bills is they require audited financial statements,” Aronson told McKnight’s. “The audits would add significant costs to the facilities. They’re very expensive.” 

Aronson cast doubt that the new requirements would provide meaningful information that the government doesn’t already have access to through cost reports. He also projected the costs of audits to be over $100,000 per building, per year when factoring in all involved parties.

“We think that cost is excessive to require information frankly that the state already has,” Aronson said. 

Jim McCracken, president and CEO of LeadingAge New Jersey & Delaware, expressed similar hesitation.

“Nonprofit nursing homes file 990s, so there is financial transparency regarding their operations,” McCracken told McKnight’s. “The bill … would create duplication and result in increased administrative costs for nonprofits. If the proposed bill becomes law, administrative costs would increase, diverting resources that would otherwise be available to improve patient care.”

Advocates, on the other hand, claim the bills are necessary to provide clarity on nursing home finances in the state. They could impact how New Jersey’s facilities are regulated for staffing and how they are reimbursed for the care they provide, according to Facciarossa-Brewer.

A proposed staffing rule from the Centers for Medicare & Medicaid Services would raise minimum requirements for facilities across the country. Opponents say most nursing homes do not meet those requirements, are already struggling financially and would be heavily burdened by extra operational costs without corresponding reimbursement adjustments to cover losses.

Meanwhile, some advocates for the proposed staffing rule argue that it does not go far enough in regulating care quality. 

Facciarossa-Brewer asserted that these transparency bills would allow lawmakers to see the full picture of nursing homes’ financial status and, therefore, make more informed decisions about regulations and how to allocate government resources.

“Nursing home owners and their lobbyists argue that many cannot afford to recruit and retain additional staff,” Facciarossa-Brewer said. “Greater financial transparency would go a long way toward proving — or disproving — those claims.”

Policymakers and consumer advocates are beginning to push for similar transparency measures across the country, including recently in California, according to Aronson.

This article has been updated to add clarifying language and also correct a misstatement to properly note that providers would have to pay for the new audits.

Providers broadly agreed that the new rule is necessary — or at least that it is an important step toward improving transparency for residents. However, some described the additional reporting requirements as a distraction from more important steps that could improve care quality.

The rule is a diversion from the most important issues, according to The American Health Care Association/National Center for Assisted Living

“We support transparency and appreciate the administration’s efforts to assist families in making more informed decisions,” noted the group in a statement emailed to McKnight’s Long-Term Care News. “However, more paperwork reporting will not drive quality. This has become a distraction from the real issues that impact the majority of providers, like Medicaid underfunding and workforce shortages.”

AHCA’s statement urged further substantive action to address the underlying causes of care quality issues. 

“If we truly want to improve America’s nursing homes, we need policymakers to prioritize investing in our caregivers and this chronically underfunded healthcare sector.”

Providers, owners endorse

Other groups were less reserved in their support for the new rule.

LeadingAge endorsed the rule as a means of investigating how facility ownership affects care quality. 

“The final rule, which we support, will facilitate further research and analysis of how and to what extent ownership types affect and correlate with outcomes and the quality of care provided to nursing home residents,” said Katie Smith Sloan, president and CEO of LeadingAge, in a statement to McKnight’s . “CMS has committed in the final rule to providing further guidance and examples concerning the scope of data that must be submitted, as well as how the information submitted by providers will be published. We will work closely with the agency on these important issues as it moves toward implementation of the requirements.”

Sloan noted that LeadingAge’s nonprofit members already publicly disclose their ownership and management information through the Internal Revenue Service.

A top REIT executive also endorsed the final rule’s release, saying “transparency is good.”

“I’ve been publicly supportive of this,” said Rick Matros, president and CEO of Sabra Health Care REIT in an email to McKnight’s. “There are groups that have opaque ownership structures so you don’t know who owns what. REITs have never taken steps to disguise/hide ownership.”

The rule’s finalization comes months after many of its ownership transparency measures were initially outlined in a February proposal.

Feds targeting REITs

Nursing homes will have to disclose the involvement of both private equity and real estate investment trust owners upon initial enrollment and revalidation and during any change of ownership.

CMS claimed that the new rule is the result of increasing concern over the quality of care in nursing homes owned by REITs and private equity, according to a fact sheet published early Wednesday.

CMS cited academic research that “suggests that ownership of nursing facilities by private equity companies and other types of investment firms can be associated with worse resident outcomes, and merits closer scrutiny.”

Ownership involvement that will now be tracked by CMS includes any party that exercises financial control over a skilled nursing facility; leases or subleases property to the SNF; has 5% or more stake in the value of SNF property; or provides a SNF administrative services, clinical consulting services, accounting or financial services, policies or procedures for any of the SNF’s operations, or cash management services.

The Biden administration has been putting increasing pressure on private owners of nursing homes through a variety of tools, most of them involving new ways for the public to understand who runs nursing homes and how they do it. This latest rule is expected to increase transparency into related party transactions, in which facilities own affiliated companies that they pay for services such as rent and administrative services.

Under the new rule, providers will be required to submit ownership either on a Medicare enrollment application or through means developed by individual states, in the case of Medicaid-only nursing homes.

US Senator Bob Casey (D-PA), chairman of the Senate Special Committee on Aging, said he supports the rule.

“For far too long, private equity firms have largely been able to avoid scrutiny into their ownership of nursing home facilities, which is associated with raising costs on residents while delivering worse care,” Casey argued. “This final rule from the Biden administration will allow us to look under the hood of these facilities, giving us the tools we need to better protect nursing home residents and hold negligent or profiteering facility owners accountable.”

CMS said it will provide information later as to how it will publicly post the collected data. The agency said it also will issue sub-regulatory guidance to explain the new requirements to stakeholders, including examples of the types of data that must be disclosed.

The new law, which took effect Oct. 1, comes amid a push by state attorneys generals and federal lawmakers to increase transparency around facility ownership structures. 

In April, 18 state AGs asked the Centers for Medicare & Medicaid Services to move ahead with a proposal to 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. US Sen. Charles Grassley (R-IA) has long pushed for enhanced transparency rules for nursing homes.

Several states have already moved to add more oversight, with some including Minnesota and California, requiring their attorneys general or health departments to give direct approval of certain deals.

In Connecticut, the biggest change takes away an exemption governing changes of ownership to relatives, Todd J. Selby, an attorney with Hall, Render, Killian, Heath & Lyman, told McKnight’s Long-Term Care News on Monday. Required filings dealing with change of ownership now include anyone related by blood or marriage. 

“Now that this exemption is gone, these types of ownership transfers require the beneficial owner to complete the new application process for licensure,” Selby said. 

Change of ownership applications must be submitted at least 120 days before any change occurs, and that is likely to bog down the process of mergers or sales as the state Department of Health has to review everything, Selby said. 

Facilities undergoing changes in ownership in Connecticut also must now provide a description of the proposed transaction and the name of all current owners; affidavits that no new owner, administrator, medical director and other high-level staff have been convicted of a felony or been held liable in civil fraud or embezzlement; the relevant business experience of the owner and administrator; organizational charts of the new owner and any wholly-owned subsidiaries; and from where the funds to make the purchase came. 

“This law is aimed at providing transparency that identifies all owners and entities affiliated with the proposed ownership of a nursing home,” he added. “While it does not specifically say the intent of the law is to discourage private equity ownership of nursing homes, this is almost certainly the case. CMS is highly distrustful of private equity ownership of nursing homes. Laws like this one in Connecticut are likely targeted at ferreting out private equity ownership of nursing homes.”  

The transparency rules were rolled into a larger legislative package that also included requiring a “plain language” explanation of how Medicaid rates are set, notifying the state’s Long-Term Care Ombudsman on the day of involuntary transfers or discharges, and requiring nursing homes to submit annual cost expenditure narratives to the state’s Department of Social Services.

At the time of passage, both LeadingAge Connecticut and the Connecticut Association of Health Care Facilities supported the package. Both organizations’ executives told McKnight’s on Monday that it remains too early to tell how the new ownership laws will affect the landscape. 

“LeadingAge Connecticut was supportive of the concept of the bill and appreciated the establishment of some clarity and consistency to the change of ownership application process, but we were concerned about the breadth of the requirements,” said Mag Morelli, president LeadingAge Connecticut. “Now that the new law is in place, we are hopeful that the new change of ownership process will be better understood by both the selling entities and the potential buyers and that there will not be any unnecessary hurdles in the way of appropriate ownership of healthcare facilities.”

Matthew Barrett, president of Connecticut Association of Health Care Facilities, said that his group will keep a close eye on transactions.

“The association will be monitoring future transactions on the question of whether stricter change of ownership requirements and disclosures is undermining transactions,” he said.

Well, we certainly can’t say the Centers for Medicare & Medicaid Services always misses with its promises.

Sure, there’s that little ol’ first-ever federal nursing home staffing mandate thing that’s an overdue cliffhanger. You know, the story of the year … whenever details are released. (See last week’s finger pointing column.)

But then this week, the agency made good on its promise of tightening the screws on facility owners, especially multi-facility involved owners and stakeholders. As is usually the case, it seems like a few bad apples have compelled regulators to make things tougher on everyone.

Per the news we broke Wednesday, the feds have really pulled back the curtain on nursing facility owners and related parties. They’re now posting all sorts of ownership and intertangled relationship information on the Care Compare website.

Seems all those movies you might have seen about complex corporate webs and cynical “behind the scenes” players nefariously pulling levers for only their own benefit were also seen by CMS honchos. So now everything is all out in the bright light for everyone to see — or at least that’s regulators’ hope.

On top of that, they’ve tied performance scores to each ownership entity. We’re talking inspection reports, quality indicators, staffing levels and much more. If your favorite Major League Baseball team has a lousy batting average, you can find out about it in various places. Well, now the same is true for facility owners/operators and their multiple facility affiliations.

Sports fans for years have gone round and round arguing the merits of Jerry Reinsdorf owning both the Chicago Bulls and the Chicago White Sox, to further the sports analogy theme. (There are many other business moguls who also own multiple franchises, and roundly get roasted or toasted, depending on their individual successes.)

I can tell you in Reinsdorf’s case, the complaints have been loudest when his teams have had lousy records, underperformed or lacked investment by management. But complaints when Michael Jordan and the Bulls were winning six NBA championships, or the 2005 White Sox won the World Series? Not so loud. In fact, virtually non-existent.

Producing a winner, or at least a respectably performing product, seems to be the elixir to quell malcontents. Why wouldn’t the same dynamic be in play with nursing home operators — especially when they’re benefitting so mightily from taxpayer money?

Providers make good points

That’s not to say providers don’t have a few valid bones to pick with what’s been unveiled so far. Consumers will need more context in some instances. For example, ownership groups are identified by how many Special Focus Facilities or candidates they have, as well as how many facilities have been hit with an “abuse icon.” But the results page does not appear to explain what those designations mean. Somehow this isn’t totally shocking. Re-consult the “abuse icon” coverage in deeper detail to learn how tone deaf CMS can be.

The agency must take every effort to make Care Compare information easily understood because, as one provider advocate rightly pointed out, website visitors are bring differing levels of comprehension with them. And, also true to her words, different audiences use federal nursing home sites in different ways.

Providers also make a good point about how CMS — the powerful overseer-funder of the sector — needs to give both sides of that hyphenated label sufficient attention. Most often lacking is the funding side, any provider will tell you.

But skilled nursing lobbyists veer off track when they intimate that owners’ commitment cannot be discerned via performance scorecards. The most basic sports fan will quickly point that out facility owners can, and should be able to, make clear their commitment to delivering decent outcomes. Where there’s a will, there’s a way, is how most would put it.

So there’s a call now to let the sun shine on executive leadership and show some not so bad results. In long-term care, a least one doesn’t have to be a world champion to keep the naysayers at bay. You just have to put a good team on the field, keep the beer cold and make a reasonable attempt to send people home happy.

It really doesn’t get much more complicated than that. Winning teams make people forget about flaws or other bumps in the road. Many solid providers already do it every day, in every corner of the country.

And so the expectations now go for all nursing homes in this new era of ownership transparency. Game on. While many will be absorbed in discovering the losers, let’s also not forget to revel in the winners.

James M. Berklan is McKnight’s Executive Editor.

Opinions expressed in McKnight’s Long-Term Care News columns are not necessarily those of McKnight’s.

The American Health Care Association bristled at the introduction of two new data tools by the Centers for Medicare & Medicaid Services. One lists affiliated owners on the consumer-oriented Care Compare site, while the other analyzes ratings and other metrics across any portfolio in a comprehensive database.

Care Compare is an easily accessed site that puts a host of new information at consumers’ fingertips. Some provider leaders immediately raised concerns about how well that information might be understood without context. For instance, a search of any ownership group reveals how many Special Focus Facilities or candidates it has, as well as how many facilities have been hit with an “abuse icon.” But the results page does not appear to explain what those designations mean.

“We support transparency and appreciate the Administration’s efforts to assist families in making more informed decisions. However, focusing on ownership does not prove whether a nursing home is committed to its residents,” AHCA said in a statement. “What’s going to improve care is growing our workforce, incentivizing providers to improve on key quality metrics, and investing in our chronically underfunded long term care system.”

AHCA said nursing homes are focused on quality metrics “that will make a meaningful difference in the lives of our residents.” The statement said policymakers should work in tandem with providers on those goals, rather than simply driving forward with more transparency efforts.

CMS began posting nursing home affiliations and the performance measures on Nursing Home Care Compare and data.gov.cms, respectively, on Wednesday, issuing a memo to surveyors about the newly available data at the same time.

Justification, qualified support

The update is being painted as the next phase in a multi-step process to bring increased transparency to the sector, whose owners and investors have been targeted by the Biden Administration since early 2022.

“As part of CMS’s commitment to transparency, our goal is to provide consumers with as much information about nursing homes as possible to support their healthcare decisions,” the agency wrote Wednesday. “Allowing consumers to see information about a nursing home’s affiliated entities directly on Nursing Home Care Compare supports our initiative to promote data transparency and dissemination, and allows consumers and their caregivers to make more informed decisions about their care.”

LeadingAge took a more supportive approach, with one leader calling the move a “step in the right direction.”

“We are happy to see the Centers for Medicare and Medicaid Services moving in the right direction towards increasing transparency of nursing home ownership,” Jodi Eyigor, director of nursing home quality and policy, said in a statement Wednesday afternoon. “LeadingAge and its nonprofit, mission-driven providers value transparency and accountability obligations because they promote nursing home excellence — and because they strengthen our organizations and the communities that we serve.”

Eyigor said in her statement that LeadingAge wanted to learn more details about how the tools will work and how CMS will make the data accessible and user friendly. She touched on that concern in a call with members Wednesday, adding that “different audiences use these two sites in different ways.”

She asked that CMS make certain the information presented is easily understandable for consumer users, who may not be familiar with all of the regulatory and quality measures cited on the performance pages at data.cms.gov.

CMS memo details 

CMS said it is posting affiliated entity names and affiliated entity identification numbers for each facility on Nursing Home Care Compare. It defined affiliated entities as groups of nursing homes sharing at least one individual or organizational owner, officer or entity with operational/managerial control.

The ownership data will be pulled from the Provider Enrollment, Chain, and Ownership System, or PECOS, the electronic Medicare enrollment system.

The performance data will include averages of ratings for the overall, inspection, staffing, and quality measure star ratings, staffing measures, quality measures, select enforcement remedies imposed, percent of facilities for-profit and not-for-profit, number of Special Focus Facilities and COVID-19 vaccination rates, CMS said.

While skilled nursing providers have bristled at some transparency changes, consumer advocates have argued that consumers are often unable to identify facilities under the same corporate structure. While the new groupings may allow Care Compare users to more easily reject facilities owned by a company they see as low-quality, it could also allow them better ability to identify those linked with an organization whose reputation they trust.

CMS has set up an email for providers who believe their affiliation information is incorrect.

Changes or updates can be requested at NH_Affiliation_Inquiries@cms.hhs.gov.

Accuracy and timeliness of the data could be a concern, given that skilled nursing facilities can change owners frequently. As just one example, a Genesis Healthcare-branded building in Southeastern Pennsylvania currently comes up within the new Care Compare verbiage as belonging to HCR ManorCare, although HCR ManorCare went bankrupt and sold most of its buildings to ProMedica and Welltower in 2018, before some of those assets were bought by Genesis earlier this year.

But lawmakers there did not take the same stringent tone when it came to a proposal that would have increased the daily direct nursing care requirement, or staffing minimum, by more than one-third.

Lawmakers in Connecticut approved new accountability and transparency measures aimed at shining a light on who is making decisions or who is profiting from nursing, according to local reporting. The information gleaned from these new reports that could show if “owners and operators are collecting large salaries or administrative fees” could be used to introduce more bills “requiring facilities to direct a certain portion of state funds toward direct care only,” according to an article in the Hartford Courant. 

“We have to know what’s going on,” Rep. Jane Garibay (D), a co-chair of the Aging Committee, told the paper. “We don’t really know how much they’re earning. And not just the bottom line of the nursing home — how much are the owners earning? That’s going to be an important piece.”

Nursing home operators who fail to disclose private equity or real estate investment trust stakes may be fined up to $10,000 for each reported violation, the paper reported. They will also have to submit narrative expenditure summaries to accompany annual cost reports filed with the state. 

Enhanced accountability and directing funding are among legislative trends seen in states and at the federal level. US Sen. Chuck Grassley (R-IA) has been pushing the Centers for Medicare & Medicaid Service to finalize rules the agency has let sit since May 2011 to clarify ownership definitions, set “strong” auditing and enforcement measures; and create an “easily searchable format” for required information. 

New York recently passed legislation that would lessen the penalties on nursing homes that fail to meet new requirements to spend 70% of their revenue on patient care with at least 40% of that mandated to pay for resident-facing staff. The legislation also drops the amount of money facilities that exceed a 5% profit cap will have to pay back to the state if they reduce their usage of agency staff. Gov. Kathy Hochul (D) has not yet signed those bills into law. 

As the clock ticks on the federal Centers for Medicare & Medicaid Services’ release of a federal rule on staffing minimum levels, lawmakers in Connecticut ultimately took a pass on creating a state law that would have raised from 3 hours to 4.1 hours the minimum time required for direct nursing care per patient day. 

That staffing minimum measure would have cost $26.6 million in the first year of implementation. The sector’s operators opposed the rule, pointing to the ongoing workforce crisis. 

Lawmakers also passed on a bill that would have cut funding for facilities where occupancy drops below 90%, opting instead to create a working group to examine licensed bed capacity and whether Medicaid payment policies are supporting “right sizing” the sector, the Hartford Courant reported.

“The notion of having a thoughtful study and review that really drills down on the excess bed capacity issues is well timed and a smart move in our view,” Matthew Barrett, president and CEO of the Connecticut Association of Health Care Facilities, said, according to the newspaper. “Right-sizing, rebalancing and questions of bed capacity are part of the culture or calculus of Medicaid decision making now. … And so with that, the policy of really drilling down on where the excess beds are is a smart move.”

But they appeared to at least tepidly embrace the latest salvo in an ongoing effort by the Centers for Medicare & Medicaid Services to reveal more to the public about ownership, management and related parties.

In a proposed rule announced late Monday, the agency said it would use a tool included in the Affordable Care Act to require more information on nursing home owners, managers and real estate and other partners. It also plans to include private equity and real estate investment trust definitions, 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.

CMS will begin capturing such information in an updated nursing home enrollment application to be used starting this summer, reserving the right to have specified providers complete such paperwork even outside their normal five-year reenrollment cycle.

“I don’t believe our tenants have any concern about additional ownership disclosure. I’ve often publicly stated my support for transparency in ownership,” Rick Matros, CEO of the Sabra REIT, told McKnight’s Long-Term Care News on Monday.

But he joined American Health Care Association President and CEO Mark Parkinson in questioning why administration officials continue to lump together groupings such as private equity and REITs as if they were the same.

“We support transparency and appreciate the Administration’s efforts to assist families in making more informed decisions. However, focusing on ownership and private equity is a red herring,” Parkinson said Monday. “Less than 5% of nursing homes are owned by private equity firms and roughly 12% are owned by a REIT, an entity that typically has no influence on daily operations. This has become a distraction from the real issues that impact the majority of providers, like Medicaid underfunding and workforce shortages.

Many real estate investment trusts supported the operators who lease properties from them during the pandemic, offering resources and rent concessions in the first two years of the pandemic. Many of the major REITs in the long-term care space are publicly traded and hold earnings calls to discuss investment strategies with the public, posting related financial information for public review. 

And though some do cloak some operators in secrecy, many REITs partner with providers whose operations are at least fairly transparent.

Matros noted that when Sabra transferred the bulk of the North American Health Services portfolio to the Ensign Group, a major Sabra holding, one of the benefits he touted was that Ensign was a publicly held company. Matros said he viewed that transparency of one of the REIT’s two largest tenants as “good for everyone.”

Ownership details, definitions

The rule proposed Monday adds several new definitions that Health and Human Services officials said will “allow families to make more informed choices about the care of their loved ones, and it will enable CMS and others to scrutinize more closely how ownership types correlate with care outcomes and to determine which environments are more likely to deliver better care for residents and patients.”

Those include, but are not limited to, a private equity company, real estate investment trust, additional disclosable party, and organizational structure.

A private equity company would be defined as a publicly traded or non-publicly traded company that collects capital investments from individuals or entities and purchases an ownership share of a SNF. The agency would define a REIT as a publicly-traded or non-publicly traded company that owns part or all of the buildings or real estate in or on which the provider operates.

“We recognize that these definitions may be modestly different from definitions of the same terms used in other settings,” CMS acknowledged.

The rule will also add to efforts launched last year to better understand the role of related parties in nursing home ownership and operational structures.

A “disclosable party” is a person or entity that exercises operational, financial or managerial control over a facility; provides policies or procedures for any of the facility’s operations, or provides financial or cash management services to the facility; or leases or subleases real property to the facility.

Rule long in the making

CMS proposed expanding ownership reporting using the Affordable Care Act as far back as 2011, but did not act then because “we needed more time to consider the comments received.”

The decision to act now was at least partly informed by recent federal watchdog reports that cast blame on CMS for lapses in quality of care and background screening. The agency also noted a growing body of research that has linked private equity investment with declining outcomes.

In particular, the rule cites a 2021 analysis from the Journal of the American Medical Association that found private equity companies seek annual returns of 20% or more and face intense pressure to generate high short-term profits and “reduce staffing, services, supplies, or equipment, which could adversely affect quality of care.” 

“We believe nursing home owners and operators are in a position to address some of the problems referenced in the aforementioned analyses and reports and make operational improvements,” CMS said in a draft version of the rule that appeared on the Federal Register website Monday. “Knowing who these parties are through their disclosures on the Form CMS-855A and to States would: (1) provide additional transparency that may assist CMS and other regulators in holding nursing facilities accountable; and (2) allow consumers to select facilities with better knowledge of their owners and operators.”

The Biden administration has leaned heavily into academic and consumer concerns about private equity-ownership, keying into that as it launched its nursing home reform plan nearly one year ago. At the time, the White House claimed that “(f)or too long, corporate owners and operators have not been held to account for poor nursing home performance.”

“We stress that the above-mentioned concerns about nursing home ownership are not limited to private equity companies,” CMS said in the proposed rule Monday. “Other types of private ownership, such as real estate investment trusts (REITs), have generated similar concerns; indeed, REITs, in addition to private equity companies and other investment ownership structures, were specifically referenced in the February 28, 2022, White House fact sheet.” 

CMS said it intended to make data collected as part of the latest rule publicly available within one year of the rule being finalized. The agency also will consider posting the information on data.cms.gov.

Comments on the proposed rule must be received by April 14, 2023.

NASHVILLE, TN — Providers renewed their concerns about staffing constraints, workforce retention and the survey process during a rare live forum with a top Centers for Medicare & Medicaid Services leader Tuesday.

David Wright, director of the Quality Safety & Oversight Group at CMS, fielded provider questions on a range of topics during the second full day of the 73rd annual American Health Care Association/National Center for Assisted Living convention. The session was billed as both a way for CMS to gather feedback and to help providers prepare for a wave of new regulation.

“It’s important for us to hear directly from nursing homes as we transition out of the pandemic and refocus on some of the things that we were focused on before the pandemic,” Wright told McKnight’s Long-Term Care News after the session.

He said questions about the ongoing temporary nurse aide waiver process dominated much of the conversation, and he encouraged providers to work with their states if they continue to struggle with certification delays. 

After the members-only session, attendees told McKnight’s that key topics of discussion included a proposed staffing minimum currently being studied by the agency, improved data sharing and transparency efforts, and the lack of clinical representation among surveyors.

Wright “emphasized that CMS values transparency, data sharing and improved communication with providers as a pathway toward improved survey compliance,” said Yvonne Choong, director of government affairs with the California Association of Health Facilities. “Session participants had the opportunity to ask questions and brought forth concerns about constraints that they face, including workforce retention and recruitment challenges and the lack of state surveyors with clinical training.”

Multiple sources said the session was congenial but at times frank. The audience broke out in laughter several times.

“It was definitely respectful both ways,” said Chris Puri, an attorney with Bradley Arant Boult Cumming LLP in Nashville and former counsel to the Tennessee Health Care Association.

“Regarding the upcoming staffing mandate rule, several providers in the audience asked fair but direct questions about whether CMS was going to consider the reality that SNFs may not be able to recruit and hire sufficient employees to meet whatever mandate CMS comes up with,” Puri reported, noting that Wright said CMS would consider such comments when they are filed in response to a proposed staffing rule.

While Puri said Wright told providers CMS was well aware of the nursing shortage — mentioning the agency’s own struggles to hire — he acknowledged that CMS had been given a directive to pursue the staffing rule.

Staffing at crux of CMS concerns

Wright encouraged providers to remain part of the conversation as multiple new skilled nursing rules kick in, starting later this month with new surveyor guidance for the Rules of Participation.

“The session was informative and we appreciate CMS publicly stating their commitment to transparency, data sharing, and seeking to incorporate feedback from LTC providers in policy development, and taking actions toward these goals,” Choong said.

She added that the staffing minimum was a major concern of providers given significant challenges and providers’ inability to improve compliance if they have no workers to hire, there was little discussion of how the rule itself might be shaping up.

Some owners and operators this week have discussed their ideas on what would be needed to make a minimum achievable. Nate Schema, president and CEO of The Evangelical Lutheran Good Samaritan Society, told McKnight’s he supports inclusion of a waiver in the rule for facilities that can prove severe hiring hardships.

“Our biggest concern is that we’ll get something that’s one-size-fits-all,” he said, noting his organization has about 2,000 openings systemwide. “We can’t find people today, so the thought of layering on a 4.1 [nursing hours per patient per day standard] could have a devastating consequence on a rural community. … I just don’t see it as sustainable.”

Others continue to advocate for an approach that incorporates non-nursing staff, such as therapists and activity directors into any calculations.

There was no discussion during Wright’s session about specific staffing level targets or which staff might be counted in the rule, Choong noted.

CHICAGO — More transparency and accountability of nursing homes owners will remain a top focus for the Centers for Medicare & Medicaid Services as it implements reforms in the coming year, according to the agency’s top official.

CMS Administrator Chiquita Brooks-LaSure stressed the agency’s position during a roundtable discussion with Illinois state officials and caregivers a few hours after it released new data on nursing home ownership for the first time Wednesday morning. 

Caregivers and nursing home workers called for staffing solutions to address shortages, including better pay and benefits. They also argued that more transparency of ownership provides for better accounting of revenue spending. 

“We’ve heard a couple of comments about ownership and one of the things that we are really focused on is more transparency and how the dollars are being spent and making sure we know what’s happening in terms of who needs to be held responsible for issues,” Brooks-LaSure said during the event. 

“What we are seeing is a tremendous amount of change in the industry and we want to better highlight what’s happening there,” she added. 

CMS has a “long history” of making data more transparent to help shape future policies, said Jonathan Blum, CMS’ principal deputy administrator and COO. 

“[Transparency] changes behavior, it changes how the industry talks to us but also [how it] talks to states,” Blum said. “I think this is a huge commitment towards us wanting to get better information to help inform policy and also help the public demand better answers about their tax dollars being spent.” 

Brooks-LaSure said CMS’ plan is to take the lessons learned from stakeholders across the country, like the discussion Wednesday, to help put a “different face” on the policy issue.

Medical directors play a largely invisible role in the care of residents, said AMDA—The Society for Post-Acute and Long-Term Care Medicine, in response to the president’s recent nursing home reform proposal. There is no simple way of finding out who leads care at a facility, leaving residents and their families in the dark about care quality, the organization stated Friday.

A detailed public directory of the clinicians who oversee medical care in federally certified facilities should be made available to residents, their families and government stakeholders, AMDA proposed.

The data could live on a public website — perhaps within the Centers for Medicare & Medicaid Services’ Nursing Home Compare site, Karl Steinberg, M.D., president of AMDA’s board of directors, told McKnight’s Clinical Daily. CMS does not currently collect such information, he said.

“It is not information that is generally communicated to new residents and their families when they are considering admission to facilities, but it should be,” he said. “This is all the more important because, unlike in hospitals, the only real quality assurance for physicians who care for residents of the facility comes through the medical director.”

Such a directory would also aid information sharing, he added. In many cases, these  clinicians are disconnected from the flow of important and timely public health information.

“It would have been extremely useful during the pandemic to be able to push out important clinical updates to those medical directors if such a registry did exist,” he said.  

A medical license alone won’t cut it

Hiring practices and a lack of training requirements contribute to the profession’s underutilization and invisibility, Steinberg and colleagues said. One outcome of these problems is the glaring COVID-19 care disparities seen during the pandemic, AMDA contends.

“We have seen a stark contrast in the response to COVID-19 in facilities where the medical director is well-trained, fully engaged and knowledgeable about geriatric medicine and infection prevention and control practices, versus those where they are not,” the organization said in its statement. 

“Facilities now can hire anyone with a medical license to serve as medical director,” Steinberg added. This allows “unethical operators to select physicians merely on the basis of referral volume, or because they will not speak out against inappropriate practices in the facility,” he said.

The only training for industry medical directors available now is through the American Board of Post-Acute and Long-Term Care Medicine, Steinberg noted. California, for one, requires all nursing home medical directors to obtain certification from this program within five years. But there is no national requirement to do so. 

Steinberg foresees a system in which medical directors bill their coursework time against their medical director hours and/or stipend. Alternatively, facility owners could cover the costs of the certification, which can run to about $4,000, he said. Enforcement could be encompassed within the normal federal survey process, he said.

“While obtaining a [certification] might not be the only way to ensure a basic knowledge level pertinent to nursing home medical direction, it is probably the simplest way,” he told McKnight’s. 

“The sad reality is that many current nursing home medical directors do not know complex geriatric medicine principles and have zero knowledge …  in the regulations we need to practice under, which creates risks for the vulnerable population we care for,” Steinberg said.

Hiring qualified candidates

People have the right to know who a facility is engaging to take on federally mandated duties, said Steinberg. When a nursing home operator hires medical directors who are knowledgeable about geriatric medicine, bioethics and the complex regulatory framework that nursing homes operate under, they “can post the information prominently in their facility, include it on their websites and promotional materials, and generally feel confident that the care being provided in their building is both clinically sound and compliant with regulatory requirements.”

AMDA also encouraged the administration to issue a self-identifying specialty code for post-acute and long-term care medicine, something it said it has been urging CMS to do for four years.

In addition to greater transparency for the role of medical director, the organization supports other aspects of the reform plan. These include a transition to reduced-occupancy or single-occupancy rooms, a requirement for full-time infection preventionists and the establishment of a nursing home career pathway. It rejects punitive measures outlined in the plan, however, saying that these have not worked in the past.