A major consumer advocacy group is urging federal regulators to use newly expanded nursing home ownership data to block owners associated with other poorly performing facilities from obtaining Medicare certification for new ventures.  

In its report issued Thursday, the Center for Medicare Advocacy said that the Centers for Medicare & Medicaid Services should develop “explicit federal criteria” for facility ownership, including the certification needed to participate in Medicare and Medicaid programs. It said new data being collected by the agency can help feed that decision-making process and enable the federal government to step in where states have not.

“Explicit federal rules and guidance about certification would be especially helpful at this critical time when ownership of facilities is shifting to private equity, real estate investment trusts, and multi-facility operators that are frequently found to provide poorer quality of care to residents,” the Center for Medicare Advocacy said. 

“The affiliated entities information now publicly reported by CMS provides ample evidence of problem companies whose facilities have a history of poor care. This information should be persuasive to Congress that CMS needs additional legal authority so that it can consider the records of facilities with owners in common when it makes federal certification decisions.”

The report focused on quality measures, ratings and penalties associated with the nation’s 15 largest nursing home owners, which include nonprofit, privately held for-profits and private-equity backed organizations.

At least some of the data in the report, though, is inaccurate, providers told McKnight’s Long-Term Care News Friday.

PruittHealth Chairman and CEO Neil L. Pruitt, Jr., for example, said that data needs to be both taken in context and be accurate. The report states that the company has 87 facilities in four states, he noted. The company, however, said it has 98 facilities — with one more under construction — in five states. CMS data posted on Care Compare is often cited as outdated, particularly amid an extensive survey lag in most states nationwide.

“I don’t think imperfect data should be used to drive federal decisions,” Pruitt said. “The CMS star system is a forced distribution. If you have enough facilities, it’s hard to get on the top end and it’s also hard to get on the bottom end because you have facilities of all kinds. It also doesn’t account for organizations like ours that buy troubled facilities and turn them around.”

Biden administration priorities 

Stemming from the pandemic, the Biden administration called for comprehensive reforms to nursing homes to improve the quality of care, including creating new regulations for staffing levels, creating new penalties, and increasing transparency into ownership structures. Federal officials developed a database to identify facilities that have common ownership and control – “affiliated entities” – but CMA said in its report that the database isn’t enough. 

“The new CMS database … highlights the need for a second component in the reform agenda, evaluating whether a facility should be certified when other facilities under common ownership and control have serious deficiencies,” the report said. “The White House expected that the ownership database would be useful to the public and would ‘empower states to better protect the health and safety of residents.’”

The data that CMS began posting on Care Compare in June 2023 supports a second White House reform initiative, which is to get “explicit statutory authority from Congress” so that CMS can enforce standards of care throughout corporate ownership structures, according to the report.

“Since there is no better predictor of how an operator will run a new facility than how the operator runs facilities it already owns or owned in the past, this proposal is a common-sense way to prevent operators with poor compliance records from increasing their network of facilities and providing poor care to even more residents,” the report stated. 

Old records concern providers

Providers, though, expressed worries about CMS using outdated data that doesn’t reflect real-time situations or conditions. 

“Our concern with the CMS star ranking system is that surveys aren’t being completed on time, or the surveyor pool is limited,” PACS President and Chief Operating Officer Josh Jergensen said in an email to McKnight’s Friday. “And that because of the lack of timely surveys, data is lagging significantly. We support surveys and rankings, but we can’t do it with old records. If survey data and star rankings prohibit growth and expansion, the industry, and patients, will be the ones who are negatively impacted the most.”

Several states have pushed through legislative or regulatory measures aimed at promoting transparency in long-term care ownership structures and setting rules for who may be licensed. 

Lawmakers in Massachusetts recently approved a broad slate of reforms that would require the state’s Department of Public Health to review financial and legal information from potential new owners and management companies before granting operating licenses. Licensing applicants would be required to notify the Health Department if they are experiencing any kind of financial hardship such as bankruptcy or being placed in receivership in other states.

CMA’s report, though, downplayed the role states play in certifying owners, noting that, “Whether or not states become more effective in their licensure role, the federal government should also take responsibility for nursing home quality under its certification authority.”

The report faulted CMS for delegating that responsibility to states since such certification is required for participation in Medicare and Medicaid, which are federal programs. 

It also highlighted a series of high-profile provider implosions, including the Skyline Healthcare collapse, in which providers were able to buy buildings in multiple states but then fell apart financially. In the case of Skyline, consumer advocates accused several states of failing to do due diligence and understand how owner Joseph Schwartz was operating elsewhere before transferring licenses to him.

The report cited Syracuse University College of Law Profession Nina A. Kohn, who has identified two, existing federal conditions for certification: disclosure of ownership and management information, and having a quality assessment and assurance committee. She has written that CMS has an “unrealized opportunity to use its existing certification authority to improve nursing home quality of care by considering the performance record of facilities’ owners and operators.”

Pruitt, though, in a Friday interview with McKnight’s, said these kinds of approvals are better left to states, which “know their providers the best.”

“The system is flawed,” he said. “And if we try to regulate providers based on a flawed system, we may get rid of some really good providers. A better approach is to let the states look at change-ownership laws and look at what fits for their state.”