by James C. Sherlock

Regulators and law enforcement agencies cannot oversee what they do not understand.  

They do not understand nursing home management structures, and thus, business models of chains whose facilities, due to the core role of understaffing in those models, routinely abuse and cause the untimely deaths of residents.

Section 1124(c) of the Social Security Act is designed to provide enforcers with the data needed to understand nursing homes, their chains, and their complex relationships with other entities that provide goods and services. It instructs the Secretary of Health and Human Services (HHS) to write rules to implement the law. He has done so.

On November 17, 2023, CMS published in the Federal Register a final rule title “Medicare and Medicaid Programs; Disclosures of Ownership and Additional Disclosable Parties Information for Skilled Nursing Facilities and Nursing Facilities; Medicare Providers’ and Suppliers’ Disclosure of Private Equity Companies and Real Estate Investment Trusts” (88 FR 80141).  This final rule implements parts of section 1124(c) of the Act, which requires SNFs to disclose detailed information about their ownership and management as well as additional data regarding:

(1) other parties with which the SNF is associated; and

(2) the ownership structures of these other parties.

Refer to Medicare Enrollment for Providers & Suppliers for more information on the SNF disclosure requirements.

Section 6101(b) of the Affordable Care Act states that no later than one year after final regulations promulgated under section 1124(c) of the Act are published in the Federal Register, the Secretary shall make the information reported available to the public.  On November 21, 2024, CMS updated this dataset to include the reported information.

The Model to be Populated 

Below is a notional model that the rule aims to populate. Not shown for space reasons but required for reporting are co-owned suppliers of goods and services, such as durable medical equipment for residents and non-emergency medical transportation, that are billed separately to Medicare and Medicaid.

Many have yet to fully comply with that rule and, by extension, the law. They have claimed variously:

• The instructions are unclear. (Not really.)
• Compliance is a lot of work. (They have a point.)
• Reporting would “take nurses from bedsides.” (Nonsense. All nursing homes have administrators. Chain staffs are full of them.)

An unspoken reason is that many are obsessed with secrecy. They not only do not wish to expose themselves to regulatory scrutiny and criminal investigations, but also fear that the information they are required to provide could expose them to tort claims beyond individual facilities.

CMS last month backed off for a second time on a requirement to report additional ownership information out of cycle, meaning under a deadline, rather than waiting for a change of ownership. An industry spokesperson told McKnight’s Long Term Care News that:

Providers remain committed to transparency around ownership and to adhering to reporting requirements.

Well. We’ll look.

It’s complicated.

The National Plan and Provider Enumeration System (NPPES) assigns unique National Provider Identifiers (NPIs) to providers for HIPAA compliance. Every Medicare and Medicaid provider must obtain a National Provider Identifier (NPI) before registering with Medicare. Health plans, including Medicare, Medicaid, and private health plans, require National Provider Identifiers (NPIs) in their administrative and financial transactions.

The Medicare Provider Enrollment, Chain, and Ownership System (PECOS) is the Medicare enrollment system for healthcare providers. It serves as the regulatory information system. As crucial as those registrations are to the system designed to protect residents, citizens should be able to expect that they are completed correctly. They routinely are not.

New owners of skilled nursing facilities must obtain an NPI and register for Medicare before a facility opens for business. At that point, the only NPI data that existing owners must ensure are correct for payment are the NPI number and the legal business name. For both new and existing owners, much of the rest of the NPI application can be, and often is, non-compliant. 

Experienced researchers expect to find that certain chains’ NPI and PECOS information is noncompliant, outdated, or both. They are seldom disappointed.

Useless Provider Data in Virginia

The author has constructed a spreadsheet using parts of two CMS databases, Provider Information and Ownership, each fed by PECOS. It illustrates major problems in Virginia nursing home regulation stemming from inaccurate and incomplete data. 

As presented, it is sorted by Provider Name, showing the disclosed owners of each of the 289 certified facilities in Virginia. That offers a view of the investment structures. It is configured to be sorted by Chain Name, Owner Type, Assigned By Author, and Owner Name for other views that provide helpful information to readers. As published, the data are relatively useless for regulators.  

Going left to right across the data columns, examples of regulatory issues shown in the spreadsheet include:

• Five significant errors in Owner Type Assigned by CMS, including listing a Lifeworks Rehab facility in Harrisonburg as a federal government facility.
• Owner Type Assigned by Author attempts, unlike the published data, to provide regulators with a key ownership type they say they need to understand: private equity. It shows 172 facilities in Virginia owned by private equity, all but one by private equity chains.
• Forty-two chain-owned facilities are either listed under the wrong chain or are without a chain listed.  
• Fifteen had new provider names not shown in Provider Information.
• Thirty-eight Legal Business Names were either inaccurate or absent from published CMS data.  
• Twenty-seven facilities had “ownership data unavailable.”
• 1,142 persons and entities are listed with ownership stakes, but with ownership percentages “not provided.” Much of that is CMS’s fault. Many ownership percentages in the Skilled Nursing Facility All Owners database (filtered at the link for one of the owners of some Virginia facilities) are missing from Ownership.

The Wonder City Rehabilitation and Nursing Center example

Take the case of Hopewell’s Wonder City Rehabilitation and Nursing Center. That facility is part of the problem in Virginia; therefore, it should be monitored by regulators.

In Wonder City’s CMS data:

• In Provider Information, Chain Name is blank.
• Ownership indicates ”Ownership Data Not Available.”
• Provider Information shows “Legal Business Name Not Available.“
• NPI: 1437790730, shows that the legal business name for that facility is “Hopewell Operator LLC”.
• Skilled Nursing Facility All Owners has no record of an organization with the legal business name “Hopewell Operator LLC”.
• Elazar Fischer was the NPI Authorized Official in 2020, the same year the current owners purchased it. He was the Director of Operations at Innovative Healthcare Management (now Lifeworks Rehab) at the time. When Mr. Fischer left Innovative, the NPI file should have been updated with the new Authorized Official. It was not.
• At the time of Wonder City NPI registration, Mr. Fischer was employed at his chain’s headquarters in Lakewood, New Jersey. His CMS contact address and phone number were listed at the facility’s Hopewell address.

In summary, the data indicate that the owners of Wonder City completed the NPI and PECOS registrations poorly, were paid anyway, and failed to update them as required.

Consequences

The widespread noncompliance described here is more than just an embarrassment to CMS and the Department of Health and Human Services.

As published, these are not merely paperwork errors. The data are means to an end, but not in their current state.

Bad data at the level found in nursing home records confounds regulators, researchers, and those seeking to enforce the laws in civil and criminal courts. If HHS is looking for massive fraud in Medicare and Medicaid, private-equity-owned nursing homes would be an excellent place to start. But all investigations need accurate information to support their efforts. The scale of the omissions and errors in nursing home reporting indicates some combination of inattention to detail, lack of motivation, and, in some cases, an intent to deceive.    

Bottom Line

Two thoughts.

Nursing home regulators and tax authorities would make highly effective teams in the search for fraud and tax evasion in nursing homes. The likelihood that those defrauding Medicare and Medicaid pay taxes on their gains approaches zero.

But CMS must impose much stronger sanctions on poor reporting to help those trying to protect nursing home residents from the deadly consequences of soulless ownership.