Mary Madison, RN, RAC-CT, CDP
Clinical Consultant – Briggs Healthcare
About 14,700 nursing homes enrolled in Medicare provided care to about 1.2 million elderly or disabled residents in 2021, for a total cost of about $28.5 billion. CMS is the agency responsible for ensuring nursing homes enrolled in the Medicare program meet certain quality standards. Nursing homes must report their owners that meet certain ownership thresholds to CMS. CMS has recently taken steps to improve the transparency of nursing home ownership by, for example, publicly releasing additional ownership data as of 2022. However, the extent to which CMS’s ownership data can be used to identify private equity ownership is unclear. GAO was asked to review CMS’s nursing home ownership data for information about private equity owners. This report 1) estimates the percentage of Medicare-enrolled nursing homes in 2022 that were private equity-owned and 2) describes the limitations of using CMS’s data to identify private equity and other owners of nursing homes. To do so, GAO reviewed data on nursing home ownership from CMS and other sources, reviewed documentation and relevant studies, and interviewed CMS officials, among other steps.
The GAO Highlights is a 1-page document.
The full report (21-pages) is found here.
There are two reasons why nursing homes may not have all of their owners listed in CMS’s data. First, not all nursing home owners are required to be reported. As noted above, nursing homes are required to report direct or indirect owners with a 5 percent or greater ownership interest. Second, in some cases, the nursing home may not have self-reported its owners as required on the Medicare enrollment form. Among the random sample of 200 nursing homes we reviewed, the number of owners listed in CMS’s data ranged from one to 16. By checking against other data sources, we estimated at least 33 nursing homes in our sample had an organizational owner that was not reported as an owner in CMS’s data, including some whose unlisted owner appeared to be eligible for reporting. For example, we found several examples of nursing homes—both those owned by private equity firms and those not—for which a holding company was listed, but the holding company’s owner was not. However, it was difficult to determine whether an unlisted nursing home owner should have been reported because the percentage of a nursing home owned by a given owner could not always be determined. We therefore did not attempt to estimate the percentage of nursing homes that did not have all eligible owners listed in CMS’s data. In addition, because there is no single, authoritative data source with comprehensive information about nursing home owners, identifying owners not listed in CMS’s data can be a time- and resource-intensive effort.
The second limitation we identified is that CMS’s data do not provide a means of readily identifying private equity firms and were not designed to do so. Therefore, additional data sources are required to determine whether each nursing home owner was a private equity firm. Various studies—including ours—used other sources, such as proprietary datasets, to determine which owners were private equity firms. However, just as there is no single, authoritative data source for identifying nursing home owners, there is also no single, authoritative data source for determining which owners are private equity firms. While proprietary databases can offer considerable information about public and private company ownership, they have limitations and may not have comprehensive ownership information available for every nursing home. Further, CMS’s system for collecting information on nursing home ownership, which is part of the Medicare provider enrollment process, was not designed to collect information on private equity ownership. If finalized, CMS’s February 2023 proposed rule would define private equity companies for the purpose of requiring nursing homes to disclose which of their owners are private equity companies on a revised Medicare provider enrollment application.
Interesting read!
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