Recently an article was published by Health Affairs that propose various recommendations relative to Nursing Home oversight and ownership disclosure that the authors believe should be made part of the Medicare Cost Report process. Some states have begun pursuing similar initiatives but this is the first time we have seen a proposal to include these items in regards to Cost Reports. The authors are:
Charlene Harrington – Professor Emeritus in the Department of Social and Behavioral Sciences at the University of California, San Francisco.
Anne Montgomery – Director of the Center for Eldercare Improvement .
Terris King, ScD – CEO of King Enterprise Group, LLC, and was director of minority health (retired) at the Centers for Medicare and Medicaid Services.
David C. Grabowski, PhD – Professor in the Department of Health Care Policy at Harvard Medical School.
Michael Wasserman, MD, CMD – Chair, Public Policy Committee, California Association of Long Term Care Medicine, and former CEO of Rockport Healthcare Services.
The recommendations include:
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HHS should immediately create an interagency (CMS, HHS OIG, Department of Justice (DOJ), and the Centers for Disease Control and Prevention) Early Detection Task Force to identify and monitor nursing homes that need more focused attention. The task force would analyze PECOS data in addition to information about staffing and medical director administrative time from the Payroll-Based Journal (PBJ) database, data from the survey and certification inspection program, and spending patterns from Medicare cost reports. The task force would coordinate oversight and monitoring across the federal government and with states, and report actionable recommendations—for example, whether “strike teams” may be needed if facilities are not able to assure resident safety, for example, during emergencies.
CMS should augment PECOS reporting to include all parent, management, and property companies, and other related party entities and ensure enforcement of Section 6101 of the ACA, including that companies provide a complete organizational chart. Failure to provide such complete and accurate data should result in specified financial penalties until the information is provided.
CMS’s Care Compare website should present information that is searchable not only by individual facilities but also by chain and common ownership, and an annual compendium should be published on the quality of care in nursing home chains.
CMS should promulgate federal regulations specifying minimum criteria for the purchase (or change of ownership) or management of any nursing home. The criteria should prevent individual or corporate owners from purchasing, operating, or managing additional facilities if they have a history of owning or operating other facilities with chronically low staffing and poor-quality care in any state. Companies with corporate settlements for fraud or for “worthless services” should be barred from purchasing new nursing homes for five years.
CMS should establish a prior approval process for changes in ownership or management. To implement these requirements, CMS should establish a centralized application unit for ownership and management evaluations, with processes delineated to work with state agencies, state attorneys general, and the DOJ. Finally, CMS should establish minimum per-day penalties for any owner or operator who has not received prior approval for a licensee or a change of ownership, including an automatic denial of payments.
Cost report requirements should be amended to require each nursing home to provide annual consolidated financial reports that include data from operating entities (license holders) and all organizations and entities related by common ownership or control. The reports should provide flow charts of all related party entities including home offices, management organizations, staffing, therapy, supply, pharmaceutical, consulting, insurance, banking, investment entities, parent companies, holding companies, and sister organizations. Management companies and property companies should also be required to provide a full financial report annually. The cost reports should be prepared by a certified public accounting firm.
Finally, a combined financial and oversight system should be established by CMS to conduct annual joint Medicare and Medicaid audits. It should include home office and related-party payer audits, with penalties levied for inaccurate cost data. As part of the audit oversight, CMS should be given full access to Internal Revenue Service filings of entities involved in the nursing home operation.
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Please keep in mind that the new HHS Secretary is coming from California as well as many of the articles’ authors. We would would assume some of them will probably have a relationship with the Secretary or his staff. While some of these recommendations are probably overly complex and unlikely to be implemented
(e.g. joint Medicare and Medicaid audits are unlikely given the different systems in every state), some of these concepts will probably get some traction. We could see increased PECOS reporting with additional focus on ownership structure including disclosure of facilities under common control. We also could see additional cost report disclosure requirements being implemented in addition to a continued increased focus on related party transactions.