Nursing Homes: Complexity of Private Investment Purchases Demonstrates Need for CMS to Improve the Usability and Completeness of Ownership Data
Published: 2010-09-30T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Since 2007, attention has been focused on nursing home ownership by private investment (PI) firms. Nursing home providers are required to disclose parties with an ownership or control interest in order to participate in Medicare or Medicaid. CMS, the HHS agency responsible for managing these two programs, maintains ownership and chain data in its Provider Enrollment, Chain, and Ownership System (PECOS). GAO examined (1) the extent of PI nursing home ownership and firms' involvement in homes' operations, (2) whether PECOS reflects PI ownership, and (3) how HHS and states use ownership data for oversight. GAO identified PI ownership using a proprietary database and analyzed data from six PI firms about their interest and involvement in nursing homes. GAO examined PECOS data for selected PI-owned nursing home chains and discussed ownership data with officials from HHS, CMS, and six states that also collect data.
section_title: What GAO Found
paragraphs: GAO found that 1,876 unique nursing homes were acquired by PI firms from 1998 through 2008. While some of the acquisitions involved entire nursing home chains, which included both the operations and any owned real estate, other acquisitions involved only the real estate. Sometimes the same nursing homes were acquired more than once. Ten PI firms accounted for 89 percent of the 1,876 unique nursing homes acquired by PI firms during this period. Of the six PI firms from which GAO collected information, those that acquired a chain reported being more involved in nursing home operations than those that only acquired the real estate. These firms had representatives on the nursing home chain's board of directors, but they generally characterized their involvement as related to the chain's strategic direction rather than day-to-day operations. PI firms that acquired real estate only had no representation on the boards of the operating companies, but officials at one PI firm observed that some leasing arrangements have the potential to affect operations. PECOS provided a confusing picture of the complex ownership structures and chain affiliations of the six PI-owned nursing home chains GAO reviewed. The database did not provide any indication of the hierarchy or relationships among the numerous organizational owners listed for PI-owned nursing homes. Further, PI ownership was often not readily apparent in the data, which could be the result of (1) PI firms not being required to be reported because of how they structured their acquisitions, (2) provider confusion about the reporting requirements, or (3) related entities that were reported but were not easily identifiable with the PI firms. Finally, PECOS chain information was not straightforward and was sometimes incomplete, making it difficult to link all the homes in a chain. Compounding these shortcomings, CMS's ability to determine the accuracy and completeness of the reported ownership data is limited. HHS has made limited use of PECOS ownership data. The only CMS division with routine access to PECOS data has been largely focused on populating the database and has not developed any standardized reports on nursing home ownership that it could share with interested parties. Some states collect their own ownership information but it can be limited to owners that operate in their state. As a result, tracking compliance problems among commonly owned homes or multistate chains can be ad hoc. State officials and others expressed interest in nationwide ownership data, such as PECOS, to improve nursing home oversight. Recognizing the growing interest in PECOS data, CMS has established a workgroup to consider how to accommodate the PECOS interests of other groups within the agency and is considering whether and how to provide access to external parties such as states. The implementation of the Patient Protection and Affordable Care Act provides CMS with an opportunity to address shortcomings in the current PECOS database and to make ownership information available to states and consumers in a more intelligible way.
section_title: What GAO Recommends
paragraphs: GAO recommends that the Secretary of HHS and CMS Administrator consider requiring the reporting of certain information to make nursing home ownership structures more understandable and take other actions to improve the accuracy and dissemination of these data as HHS implements new ownership reporting requirements in the 2010 Patient Protection and Affordable Care Act. HHS concurred with all of GAO's recommendations.

section_title: Letter
paragraphs: The nursing home industry has experienced significant restructuring in the  last two decades, with many of the nation’s largest nursing home  companies—including publicly traded companies that owned hundreds of  homes—having undergone mergers, bankruptcies, and divestitures.  Recently, private investment (PI) firm ownership of nursing homes has  attracted attention. The ownership interest or securities of PI firms  generally are not publicly traded and their activities are not otherwise  subject to federal financial disclosure requirements. Thus, when a PI firm  acquires a publicly traded nursing home company, essentially taking the  nursing home private, the company’s finances and management become  less transparent. In addition, PI firms may hold their acquisitions for a  short time and place large levels of debt on the acquired entity, leading to  concerns that quality of care may be adversely affected. A 2007 New York  Times investigation of nursing homes owned by PI firms reported that  quality of care declined in homes after they were purchased by such  firms.  Another study, however, did not show a definitive link between PI  ownership of nursing homes and quality of care and called for more work  on the issue.
To determine the effect of ownership on nursing home quality of care, it is  necessary to have complete and accurate ownership information that  provides a clear understanding of the relationship of each owner to the  nursing home and any other owners. Since at least the late 1970s, the  Centers for Medicare & Medicaid Services (CMS), within the Department  of Health and Human Services (HHS), has been required to collect  ownership information on providers, such as nursing homes, participating  in the Medicare and Medicaid programs, the largest payers of nursing  home care in the nation. CMS is responsible for oversight of providers  that participate in these two programs. Congressional hearings held in  2007 and 2008 focused in part on quality of care at PI-owned homes and  CMS’s ability to identify homes with common ownership.
You asked us to look at PI ownership of nursing homes, CMS’s capacity to  identify nursing home owners, and the impact of PI ownership on the  quality of care provided. This report addresses (1) the extent of PI  ownership of nursing homes and PI firms’ involvement in the operations of  homes they have acquired, (2) whether PI ownership of nursing homes is  reflected in the ownership information reported to CMS, and (3) how  nursing home ownership data are used for oversight by HHS and states.  We plan to examine the impact of PI ownership of nursing homes on the  quality of care in a subsequent report.
To identify the extent of PI ownership of nursing homes, we examined PI  acquisitions from 1998 through 2008, primarily using merger and  acquisition data compiled by Dealogic, a company that offers financial  analysis products to the investment banking industry. We assessed the  procedures that Dealogic uses to collect and analyze data and determined  that the data were sufficiently reliable for our purposes. We  supplemented the Dealogic data with information about additional  acquisitions that we identified through other sources, including press  releases from company Web sites, nursing home industry publications, an company filings with the Securities and Exchange Commission (SEC).  Because some homes were sold more than once during the 1998 through  2008 period and also because of the way some of the PI nursing home  acquisitions were structured, we report PI nursing home acquisitions in  two ways. First, we report the number of unique homes PI firms acquired during the period. Second, we identify 10 PI firms that owned the most  nursing homes as of December 2008. We contacted these top 10 firms— which represented almost 90 percent of all unique homes acquired by PI  firms during the 1998 through 2008 period—both to confirm the numbers  of homes they currently owned and to understand the extent of their  involvement in the operations of these nursing homes. We confirmed the  number of nursing homes currently owned for 9 of the 10 firms,  representing about   78 percent of all unique nursing homes acquired by PI firms during the  period. We also analyzed information that 6 of these 9 PI firms provided, representing about 68 percent of unique nursing homes, on the extent of  their involvement in nursing home operations.
To identify whether PI ownership of nursing homes is reflected in the  ownership information collected by CMS, we examined nursing home data  in CMS’s Provider Enrollment, Chain, and Ownership System (PECOS),  the national database of enrollment information submitted to CMS by  providers in the Medicare program. We obtained and analyzed extracts of   PECOS data as of August and September 2009, for 1,003 nursing homes in  six PI-owned chains, using identifying information provided by PI firms.  We also interviewed officials in CMS’s Division of Provider and Supplier  Enrollment, responsible for PECOS, to learn what ownership information  is captured by PECOS, how CMS enforces ownership disclosure  requirements, and how CMS ensures the accuracy of the data. We  determined that, for our purposes of reviewing ownership information  collected by CMS, the PECOS data were sufficiently reliable.
To determine how other HHS components use nursing home ownership  data and what data states collect to oversee providers, we interviewed the  following:    CMS’s Survey and Certification Group, which is responsible for oversight  of state survey activities and enforcement of nursing home quality  standards;   officials from 4 of CMS’s 10 regional offices, which assist the Survey and  Certification Group in its oversight of state survey activities, to understand  their use of and access to ownership data;   CMS components responsible for other CMS initiatives related to the  collection of data that could be used to identify nursing home chains;   six state survey agencies (California, Illinois, Maryland, Missouri, New  Jersey, and Texas) that collect nursing home ownership information when  they license nursing homes to operate in their jurisdictions; and    HHS Office of Inspector General (OIG), which has the authority to exclude  nursing homes from participating in Medicare, Medicaid, and other federal  health care programs.
We also reviewed CMS and other federal and state documents and relevant  federal regulations and statutes.
We conducted this performance audit from July 2008 through September  2010 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: Over the last decade, nursing home ownership and operating structures  have continued to evolve, including the development of more complex  structures and an increase in private investment ownership of nursing  homes. The federal government plays an important role in funding nursing  home care and ensuring that residents in the nation’s approximately 16,000  nursing homes participating in the Medicare or Medicaid programs receive  appropriate care; collection of nursing home ownership information is one  part of this effort.
subsections: section_title: Nursing Home Ownership Structures
paragraphs: Nursing homes must be licensed by the states in which they operate in  order to participate in Medicare or Medicaid. The entity that is licensed to  operate the facility is known as the provider. A provider can be an  independent company that operates one facility or the provider can be  part of a multiprovider chain organization. Some providers contract with  separate entities to manage nursing homes. In addition, the provider may  or may not own the real estate where care is delivered and any associated  medical or other equipment. Nursing home real estate assets can be  separated from nursing home operations for a number of reasons,  including to limit liability or to obtain financing. The ownership and  control relationships among these various entities can be complex. For  example, the provider may own all or part of the entity it contracts with to  operate the nursing home.
Providers can be one of three business types—for profit, nonprofit, or  government. The majority of nursing home providers—about two-thirds— are for-profit businesses. For-profit nursing home providers include a wide  range of business ownership types from sole proprietorships to large  publicly traded corporations. Within the for-profit provider type, private  investment firms—generally investment firms whose ownership interests  are not publicly traded on a stock exchange—have been acquiring both  entire nursing home chains as well as individual homes since at least the  late 1990s. Restructuring of the nursing home industry following  bankruptcies among several large nursing home chains, as well as  increased liability litigation in states such as Florida and Texas, which  prompted some chains to sell their homes in these states, created an  opportunity for private investment firms to acquire nursing homes that  were being sold by these chains. In addition, reliable income streams from  nursing home ownership made investment in the industry attractive for PI  firms.
section_title: Private Investment Firms
paragraphs: In general, PI firms use a combination of investment capital and borrowed  capital to acquire companies with the goal of making a profit and  eventually returning that profit to investors and the firm. In contrast to  publicly traded firms, PI firms generally are not subject to periodic  disclosure and other SEC requirements, including public reporting of  income, assets, and information about company operations and  leadership. Consequently, information on the operations of PI firms— including a firm’s acquisition and sale of companies—is generally not as  readily available as that of publicly traded firms. PI firm managers say this  advantage allows them to make business improvements their publicly  traded competitors may be less willing to make, such as developing  investment strategies that are not tied to producing profits on a quarter-by- quarter basis.
In recent years, attention has been given to a subclass of private  investment called private equity. One investment strategy undertaken by  private equity firms is the “leveraged buyout.” In a typical leveraged  buyout, a private equity firm establishes a fund and obtains capital  commitments from investors. These investors often include public and  corporate pension plans, endowments and foundations, insurance  companies, and individuals. The fund’s capital is then used in combination  with borrowed capital to acquire majority or complete ownership of a  company. However, most of the necessary financing for the acquisition  comes from this borrowed capital, with the fund’s capital representing  only a small portion of the total acquisition cost. After attempting to  improve the financial performance of the company (which can be over a   3- to 5-year period but may be longer), the fund sells the company; any  profits from the sale are returned to the fund and generally distributed to  fund investors and the private equity firm. (See fig. 1.)
section_title: Disclosure of Nursing Home Ownership
paragraphs: To be eligible for Medicare and Medicaid payments, nursing homes are  required to submit information on individuals or certain entities, such as  corporations, that have an ownership or control interest in the provider.  The Social Security Act requires all Medicare and Medicaid nursing homes  to disclose information on the identities of persons who have an  ownership or control interest in the nursing home in order to participate in  the programs. Specifically, the act and related regulations define “a  person with an ownership or control interest” to include a person  (including certain entities) who    has a direct or indirect ownership interest of 5 percent or more in the  is the owner of a whole or partial interest in any mortgage, deed of trust,  note, or other obligation secured by the nursing home or any of its  property or assets, equal to 5 percent or more of the total property and  assets; is an officer or director of the nursing home, if it is organized as a  corporation; or  is a partner in the nursing home, if it is organized as a partnership.
In addition, the act specifies that, to the extent determined feasible under  regulations of the Secretary of HHS, nursing home providers must disclose  for each person with an ownership or control interest, the name of any  other provider with respect to which that same person has an ownership  or control interest.
The Patient Protection and Affordable Care Act, enacted in March 2010,  expanded the ownership and control reporting requirements for Medicare  and Medicaid nursing homes by adding a new subsection to the statute.  Within 2 years of enactment (March 2012), the act will require nursing  home providers to report additional information on the nursing home,  including  the name and title of each member of the governing body of the nursing  home;   each person or entity who is an officer, director, member, partner, trustee,  or who directly or indirectly manages, advises, or supervises any element  of the practices, finances, or operations of the facility; and    persons or entities—referred to as “additional disclosable parties”—that  with respect to the facility exercise operational, financial, or managerial  control; provide policies or procedures for operations; provide financial or  cash management services; provide management, administrative, clinical  consulting, accounting, or financial services; lease or sublease real  property to the facility; or own an interest of 5 percent or more in the real  estate.
Moreover, the additional disclosable parties must report information on  their organizational structure (including the legal structure by which the  disclosing entity operates) and describe their relationship to the nursing  home and to one another. For example, an additional disclosable party  that is a (1) corporation must report its officers and directors and any  shareholders whose ownership interest is equal to or exceeds 5 percent of  the corporation, and (2) limited liability company, must report the  percentage ownership interest for its members and managers.
Within 2 years of the enactment of these new provisions, HHS is required  to promulgate final regulations that require facilities to report the  information to HHS in a standardized format. The act also requires the  Secretary to establish procedures to make such information available to  the public within 1 year after the date the final rules are promulgated and  published. Until the date the information is made available to the public,  nursing homes must have this information available for HHS and other  parties, including the state in which the nursing home is located, upon  request.
section_title: CMS Collection and Storage of Nursing Home Ownership Information
paragraphs: Nursing homes report ownership and managing control information to  CMS through the agency’s Medicare enrollment application when they  apply to participate in the Medicare program. CMS stores this  information in a national database called PECOS. The Medicare  enrollment application requires nursing homes to report identifying  information, such as their legal business name, licensure information, tax  identification number, and any chain affiliation. Nursing homes must also  report their ownership (by both individuals and organizations) and  managing control information, as well as any adverse legal action taken  against these entities. To report chain affiliation, nursing homes are asked  to identify their “chain home office”—the entity responsible for providing  centralized management and administrative services to homes under  common ownership and common control. Nursing homes are required to  submit updated information if they undergo a change of ownership or  when there are any changes to ownership or other information previously  provided on the Medicare enrollment application. (See table 1.) Nursing  homes are required to sign the application, to certify, among other things,  that the information in it is “true, correct, and complete.”
CMS stores information collected through the Medicare enrollment  application in the PECOS database. According to CMS, PECOS,  implemented in 2002, was designed to serve three purposes: (1) collect  information for a provider and record the associations between a provider  and entities that have an ownership or control interest in the provider,  including any chain associations; (2) allow CMS to make informed  enrollment decisions based on a provider’s past and present business  history, any reported exclusions, sanctions, and felonious behavior; and,  (3) ensure that CMS makes correct payments under the Medicare program.  PECOS replaced the multiple contractor systems that previously housed  provider enrollment data, facilitating the nationwide screening of  providers billing Medicare. The database contains information on nursing  homes that have submitted a Medicare enrollment application to CMS  since 2002. As of July 2010, about 81 percent of active Medicare- participating nursing homes were in PECOS. Statutes and CMS  regulations indicate that certain ownership information must be provided  to the public upon request. In a Federal Register announcement about  PECOS, CMS noted its plan for the data to be shared with federal and state  agencies as necessary to ensure proper payment of Medicare benefits, to  assist with the administration of other federally funded health programs,  or to assist with other activities within the state.
section_title: Roles of CMS and States
paragraphs: Provider enrollment and oversight of nursing homes are managed by two  different entities within CMS; state entities also have an oversight role.  CMS’s Division of Provider and Supplier Enrollment, within the Office of  Financial Management, is responsible for the Medicare enrollment  process. CMS uses contractors to handle administrative tasks related to  enrollment, including the collection and verification of enrollment  applications and associated information submitted by providers. For  example, in processing a provider’s Medicare enrollment application, CMS  contractors are required to examine the adverse legal history as reported  on the application for individuals and organizations having an ownership  or control interest in the provider and refer matters to CMS as necessary;  this adverse legal history could make the provider ineligible to participate  in the Medicare program. Each contractor is responsible for these tasks  within a certain geographic region of the U.S.
CMS’s Survey and Certification Group is responsible for oversight of state  survey activities and enforcement of nursing home quality. To participate  in the Medicare program, nursing homes must pass regular inspections,  also known as surveys, to ensure they comply with federal quality  standards. These inspections are conducted by state survey agencies  under contract with CMS. Most deficiencies identified, which can range  from minor and isolated in scope to very serious and widespread  throughout the nursing home, require the home to prepare a plan of  correction. Results from state surveys of nursing homes are posted and  routinely updated on CMS’s Nursing Home Compare Web site.
section_title: Private Investment Firms Acquired about 1,900 Nursing Homes from 1998 through 2008, although Some Acquisitions Involved Real Estate Only and Not the Operations
paragraphs: About 1,900 unique nursing homes were acquired by PI firms from 1998  through 2008. While some of the acquisitions involved entire nursing home  chains—which included both the operations and any owned real estate— other acquisitions involved only real estate. Ten PI firms accounted for  most of the acquired nursing homes. Six of the 10 PI firms responded to  questions and described similar investment rationales. Firms reported that  they were more involved in operations after acquiring a chain than after  acquiring real estate only.
subsections: section_title: About 1,900 Unique Nursing Homes Were Acquired by Private Investment from 1998 through 2008
paragraphs: We identified 77 acquisitions of nursing homes by PI firms from 1998  through 2008, involving a total of 1,876 unique nursing homes. These  acquisitions represent about 12 percent of the 15,711 nursing homes that  participated in Medicare and Medicaid as of December 2008 and about   18 percent of for-profit nursing homes. Sometimes the same nursing  homes were involved in more than one acquisition. For example, in some  cases a nursing home operating company was purchased by a PI firm in  one acquisition and the real estate for the same home was purchased by a  different PI firm in a separate acquisition. In other cases, nursing homes  were acquired more than once by different PI firms. For example, one set  of nursing homes was acquired three separate times by three different PI  firms from 1998 through 2008. Considering the 77 acquisitions  cumulatively, the nursing homes involved would total over 2,500. Figure 2  shows the number of homes acquired, by year, over the 11-year time  period. The majority of nursing homes (73 percent) were acquired by PI  firms from 2004 through 2007, a period characterized by acquisitions of  large nursing home chains.
section_title: Ten Firms Accounted for Most of the Nursing Homes Acquired by Private Investment Firms, but Some Acquisitions Did Not Involve the Operations
paragraphs: Considering only the most recent acquirers as of the end of 2008, 10 PI  firms accounted for most nursing homes acquired from 1998 through 2008.  Table 2 shows the names of the nursing home chains, if applicable, and the  number of nursing homes acquired by the 10 firms from 1998 through 2008  and still owned as of the end of the period. In some cases, the PI firms  owned only operations or only real estate as of December 2008. The 10  firms accounted for 89 percent of the 1,876 unique nursing homes acquired  by PI firms during the period.
Six of the top 10 PI firms acquired an entire nursing home chain or  founded a company that became a nursing home chain. For example,  the PI firm The Carlyle Group acquired the nursing home chain HCR  ManorCare. Another PI firm, Warburg Pincus, cofounded Florida  Healthcare Properties in 2001, which then became a chain by acquiring the  operations for 49 nursing homes.
Two of the top 10 PI firms acquired only the real estate and leased  at least a portion of their nursing homes to operating companies  acquired by other PI firms. Two firms—SMV/SWC and GE Capital,  Healthcare Financial Services—acquired the real estate for 353 nursing  homes  and leased 299 (85 percent) of their properties to nursing home  operating companies acquired by other top 10 PI firms. For example, GE  Capital, Healthcare Financial Services leased 112 properties to operating  companies acquired by Warburg Pincus. (Fig. 3 illustrates how Warburg  Pincus and GE Capital, Healthcare Financial Services separately acquired  the operations and real estate of the Centennial Healthcare nursing home  chain.)
Two of the top 10 PI firms both acquired a nursing home chain and  made real-estate-only acquisitions. Formation Capital bought the  Genesis nursing home chain, but it also partnered with GE Capital,  Healthcare Financial Services to acquire the real estate of five nursing  homes. A second firm, The Straus Group, invested in the CareOne  nursing home chain but also separately purchased the real estate only of  58 nursing homes.
According to information gathered from 2009 through 2010, 9 of the top   10 PI nursing home acquirers reported owning 1,503 nursing homes,  compared to the 1,496 nursing homes that they acquired as of   December 31, 2008. We were unable to obtain current ownership data  from 1 of the top 10 PI nursing home acquirers.
section_title: Most of the Six PI Firms That Responded to Our Questions Described Similar Investment Rationales and Were More Involved in Operations When Acquiring Chains Than Real Estate Only
paragraphs: Most of the six PI firms that responded to our questions described similar  reasons for investing in the nursing home industry; officials from five of  these six PI firms cited increased demand for long-term care due to an  aging population. For example, officials at one PI firm noted that no new  homes had been built in recent years and anticipated that demand for  senior housing would exceed the available supply. Officials at four PI  firms told us they expected to hold their investments for time frames  ranging from 3 to more than 20 years. However, one of these PI firms has  already sold one of the portfolios it acquired and had planned on selling its  other portfolios. (See app. I for more details on each firm’s nursing home  investment rationale.)
Of those that responded to our questions, four PI firms reported acquiring  entire nursing home chains. Officials from all four of these firms reported  holding seats on the chains’ corporate boards of directors. In general, they  characterized their involvement as related to the strategic direction of the  chain rather than overseeing day-to-day operations, which all four of these  PI firms described as the dominion of each chain’s executive management.  Three of the four PI nursing-home-chain acquirers said they kept the same  executive management after they acquired a chain because it was already  well managed; one firm believed the chain it acquired had quality-of-care  challenges and ultimately hired a new chief executive officer, who is a  physician. Some firms noted improvements made across chains since  acquisition. For example, according to officials of one PI firm acquirer,  among other things, it directed capital to hire directors of clinical  education, train facility staff, and reduce staff turnover. Another firm  helped create an independent quality committee to provide the board with  independent expert guidance on assessing quality-of-care data.
Two of the four PI nursing-home-chain acquirers reported dividing the  operations and real estate into separate companies for tax or financing  purposes while still retaining them under common ownership. Officials at  these two firms noted the benefits of having nursing home operations and  real estate under the same ownership. One commented that when  operating and real estate companies are unaffiliated, tensions can arise  over responsibility for improvements, reducing incentive to make  improvements to the facility. One real-estate-only acquirer strongly  disagreed with this statement and noted that a landlord with a triple net  lease has a great incentive for ensuring the real estate is appropriately  maintained. This firm said such leases clearly state the responsibilities of  the real estate owner and the operator with respect to facility  improvements and said that disagreements have been few and limited.
The three PI firms (of those that responded to our questions) that made  real estate-only acquisitions had no representation on the boards of the  operating companies to which they leased real estate, and so were not in a  position to directly control the resources or change the policies of these  companies. All three real estate-only acquirers leased real estate to nursing  home operators under “triple net” agreements, through which, in addition  to rent, the operator agrees to pay all real estate taxes, property insurance,  and maintenance on the property (including capital costs). Two firms’  leases calculated a base rent plus rent as a percentage of the operator’s  adjusted net income or excess cash flow—ranging from 35 to as much as  50 percent. In addition, while officials at all three firms emphasized that  they “do not tell the nursing home operators how to run their businesses,”  officials at two of the three PI firms that acquired real estate indicated  they monitor clinical performance at acquired homes. These officials said  they would consider terminating a lease if poor or declining care persisted,  although they had not encountered such a situation. The remaining real  estate acquirer told us it had never monitored the quality of care provided  by the operators to whom it leased facilities, but would like to start  monitoring operations, given the risk to its investment should an operator  it leases to lose its state license to operate a nursing home.
section_title: PECOS Data on PI Ownership and Chain Affiliation Are Hard to Decipher, Incomplete, and Difficult for CMS to Verify
paragraphs: PECOS provided a confusing picture of the ownership structures and  chain affiliations of the six PI-owned nursing home chains we reviewed.  For example, nursing homes had multiple owners listed in PECOS, but no  indication of the hierarchy or relationships among the owners was  provided. PI ownership of the homes, moreover, was not always readily  apparent in the data. Some states we interviewed collect ownership  information that better captures the relationships among owners, but  states still report challenges untangling complex ownership structures.  Adding to the difficulties deciphering the data, we also found that in some  cases the data were incomplete—including ownership information for  homes whose real estate was acquired by a PI firm and chain information  for several homes. CMS’s ability to determine the accuracy and  completeness of ownership data reported by nursing homes is limited.
subsections: section_title: PECOS Data on PI Nursing Home Ownership Are Hard to Decipher
paragraphs: Even though our analysis of PECOS was informed by extensive research  on PI nursing home acquisitions, the complex ownership structures  established by some PI-owned nursing home chains we reviewed made  PECOS data hard to decipher and PI ownership was not always evident.
Nursing homes often have numerous owners listed, but no  information provided in PECOS to indicate how they may be  related. For the six chains we reviewed, the number of organizational  owners listed per home ranged from 1 to 26, with an average of   8 organizational owners per home. The multitude of organizational  owners may have reflected the complex ownership structures created by  some nursing home companies. For example, one PI entity that owned a  nursing home chain created:    separate limited liability companies for the operation of each individual  home in the chain;   separate limited liability companies that owned the nursing home real    a separate company that leased all the properties from the real estate  holding companies and then subleased them to the operating companies;  and    a holding company set up to own the entire chain.
Beyond inventorying these ownership entities, PECOS currently provides  no information to indicate any hierarchy or relationships among the  organizational owners listed, such as whether one entity is a parent or a  subsidiary of another. Moreover, while entities with at least 5 percent  direct or indirect ownership of the assets of the provider are listed in  PECOS, the database does not include information on their specific  ownership percentage, adding difficulty to determining the hierarchy and  relationships among the owners listed. Because we had additional  information, we were able in some cases to recognize the varying levels of  ownership reported in the data, including entities that were holding  companies, private investment funds with no employees, or entities that  were investors in the private investment firm or an affiliate, relationships  that were not otherwise apparent from the data. For example, the  Washington State Investment Board, which invests state and local pension  funds, was listed among the owners for homes acquired by one PI firm,  and the California Public Employees Retirement System was listed among  the owners for nursing homes acquired by another PI firm. According to  the PI firms, these two entities are passive investors; that is, they do not  play a role in management of the nursing home chains.
Fully capturing these complex relationships among nursing home owners  poses challenges for a data system such as PECOS. For example, in  documents one PI-owned nursing home chain submitted to a state agency,  the chain’s delineation of its ownership structure took several pages to  describe and included a detailed chart of the ownership structure. CMS  officials said that providers can supply such organizational charts when  they submit Medicare enrollment information, but these documents are  maintained outside of PECOS by CMS contractors; currently, PECOS does  not have the capacity to store them.
Some states that we interviewed that collect nursing home ownership  information for licensure purposes collect information to capture  relationships among owners. Officials at two states we interviewed  maintain databases that attempt to capture the hierarchy of the ownership  structure surrounding the nursing home. Missouri’s ownership database,  for example, can be used to identify successive levels of ownership (see  fig. 4), which is not possible to discern with the data in PECOS.
State officials also told us, however, that they are challenged by complex  ownership structures among nursing homes. State officials from Missouri,  Maryland, New Jersey, Illinois, and California cited complex ownership  structures—including multiple layers—as obscuring ownership or making  oversight difficult. State officials also observed that nursing home chains  have set up separate limited liability companies as operators of each home  and they do not always obtain information that identifies the ultimate  parent owner. For example, Illinois officials noted that they do not  always obtain ownership information for the parent company, such as a  private equity firm, and sometimes their records only show the individual  limited liability company as the owner, such that a nursing home set up as  an individual limited liability company in one town would not be linked to  a home from the same chain set up as a limited liability company in  another town.
Expanded reporting requirements contained in the Patient Protection and  Affordable Care Act and regulations to implement the act provide CMS  with an opportunity to address some of these issues. In particular, the act  requires homes to provide the identity of and information on “additional  disclosable parties” and their relationship to the nursing home and one  another. In addition, the act requires that nursing homes report the  organizational structure of additional disclosable parties organized as  limited liability companies including, for example, their members, and  managers, and as applicable, their percentage ownership interest in the  company. While these expanded reporting requirements may provide more  insights into the relationships among some of the owners in PECOS, they  may not capture the hierarchy and relationships across all the numerous  owners currently being reported.
PI ownership was often not readily apparent in PECOS. The  Medicare enrollment application does not ask for information on the  business type of organizational owners, including whether they are PI  firms, so it is not possible to use PECOS to identify all PI-owned nursing  homes. When we tried to identify the specific private investment firms we  were aware of in the ownership data in PECOS, we found that the entities  through which the PI firms acquired nursing homes were often listed. In  some cases, associating these entities with the PI firm was relatively  straightforward, as the entities had names that were readily identifiable  with the PI firms. For example, among the many owners listed for homes  in the HCR ManorCare chain, were the entities Carlyle Partners V MC, L.P.  and Carlyle MC Partners, L.P., two private investment funds managed by  The Carlyle Group, the PI acquirer of the chain.
In contrast, PI ownership of other homes we examined was difficult to  identify in PECOS. In four of the PI-owned chains we examined, PI firms  or entities readily identifiable with the PI firms were not apparent among  the organizational owners reported for any of the nursing homes in the  chains or were listed for only a small fraction of the homes. The number of  homes in these four-PI owned chains for which PI ownership was not  readily apparent in PECOS accounted for 62 percent of the 1,003 nursing  homes we examined. We were not able to fully explain this situation. It is  possible that some PI firms, by virtue of how they structured their  transactions to acquire the homes, may not have been required to be  reported by the governing statute at the time. It is also possible that  entities were reported that we did not recognize were related to the PI  firm. On the other hand, PI firms may not have been reported, even if  required, for other reasons, for example, due to confusion about the  reporting requirements. Specifically, we found the following:    Representatives of one PI firm that was not listed in PECOS among the  owners for any of the homes in the chain it acquired said that a special  purpose entity (SPE) was created for the acquisition of the chain and was  reported as an owner on the Medicare enrollment application. The SPE,  which was not readily identifiable with the PI firm, was reported for only  about three-quarters of the chain’s homes. The representatives said that  the PI firm itself did not own any interests in the SPE and so was not on  the application. Individuals associated with the PI firm were listed as  officers/directors for most of the homes in the chain.
Another PI firm, which was also not reported as an owner for any of the  homes in the chain it acquired, did own the SPE used to acquire the chain,  according to officials of the nursing home chain. However, the officials  said that after closing on the acquisition, the title to each of the homes was  held by a subsidiary of the company that operates all the homes and  therefore the SPE neither holds title to nor operates the homes but rather  is an indirect owner. The SPE, which was not readily identifiable with the  PI firm, was listed among the organizational owners in PECOS for a small  portion of the homes. The statute currently requires the reporting of  persons and certain entities that have an ownership or control interest of  at least 5 percent, including indirect interests, in the assets of the provider  entity.
A third PI firm sold the real estate for most of the homes in the chain to  another company shortly after the acquisition; the company then leased  the facilities back to an affiliate of the PI firm. The affiliate was listed as an  owner in PECOS for most of the homes in the chain; the PI firm was not.  The individuals involved in the PI firm’s purchase of the nursing home  chain are also principals of the affiliate, some of whom were reported in  PECOS as individuals having an ownership interest for a portion of the  homes in the chain.
Finally, for one PI firm, the company the PI firm formed to fund its  acquisition of the chain, which was readily identifiable with the firm,  appeared as an owner in PECOS but for less than 20 percent of the homes  in the chain. In this case, the chain’s representatives said they had been  instructed by the CMS contractor to report only two levels of ownership  above the nursing home. As a result, the ownership information reported  by this chain was far from complete, and no common owner, including the  PI firm, was apparent for all of the homes. The representatives of the chain  said that they decided to submit complete ownership information for their  homes, on their own initiative, and were in the process of doing so,  working with a new CMS contractor.
PECOS does not provide a clear picture of individuals in the  ownership structure. The information in PECOS on individuals with an  ownership or control interest in the provider is collected separately from  and is not linked to information about organizational owners and does not  provide a clear picture of where they fit in the ownership structure.  Specifically, the Medicare enrollment application asks for the names and  even the birth dates of individuals with an ownership or control interest— including those with 5 percent or more direct or indirect ownership in the  provider, with a partnership interest in the provider, or who are directors  or officers of the provider—but it does not ask for the organization they  are affiliated with or their titles. As a result, it is not clear if individuals  reported as having a 5 percent or more ownership or control interest are  direct or indirect owners of the nursing home provider. In addition, CMS  has not required providers to report information about individuals who are  partners, officers, or directors of entities above the nursing home provider  level, such as members of the nursing home chain’s board of directors,  which in some cases would include representatives of the PI firm.  Identification of these entities is important because they are ultimately  responsible for the management of the chain. Providers may be reporting  such individuals, but it was not possible for us to distinguish this in the  data because they are broadly categorized as officers or directors with no  information included on their affiliated organizations. This issue could be  addressed when HHS implements the reporting provisions of the Patient  Protection and Affordable Care Act.
In contrast, two states we contacted—Missouri and Texas—collect more  comprehensive information about individuals with ownership or control  interests in the nursing home provider and in entities above the provider  level. These states also collect information on the specific positions of  reported individuals in these entities, such as president, secretary,  member, or general or limited partner.
section_title: PECOS Data for a PI Firm That Acquired Real Estate Only Were Incomplete and PECOS Chain Ownership Information Was Not Collected in a Straightforward Manner
paragraphs: In addition to the challenges in identifying PI owners in PECOS data, we  found that the data were sometimes incomplete and that the information  on chain ownership was not collected in a straightforward manner,  making chain associations difficult to identify.
One PI firm that acquired real estate only was not reported. A PI  firm that leased nursing home real estate to a provider but that also had a  security interest in the assets of the provider was not reported in PECOS;  however, a security interest may constitute an ownership or control  interest for purposes of Section 1124 that could obligate disclosure as an  owner on the Medicare enrollment application. For example, we found  that one firm was not reported in PECOS among the owners of the nursing  homes within the chain for which it owned the real estate. However, a  lease agreement indicates that the PI firm also had a security interest in  the nursing home’s assets that could obligate reporting of the entity as the  holder of an ownership or control interest. Officials with the PI firm told  us that they were not familiar with the application’s reporting  requirements. CMS officials noted that it may not be clear to providers that  these entities must be reported, as the instructions on the application do  not specifically indicate that a security interest is a reportable interest, and  that going forward CMS may need to revise the application to make this  explicit. The Patient Protection and Affordable Care Act requires that  entities and individuals that lease or sublease real property to nursing  homes be reported, whether or not they have a security interest or other  reportable interests. Such information, however, will not be reported to  HHS until after it issues a final rule implementing the act’s requirements,  which may not be for several years.
Some states currently collect information on nursing home real estate  owners. For example, Illinois collects information on nursing home real  estate owners, if different from the operator, and requires the submission  of any lease agreements. Illinois officials told us that the state also  requires operators to report individuals who directly or indirectly own at  least 5 percent of the nursing home real estate and their percentage stake.  With this information the state can then identify at the state level if the  same individuals have ownership stakes in both the nursing home real  estate and the operating company. CMS also has acknowledged real estate  owners in issuing guidelines on its notification policy for poorly  performing nursing homes designated as Special Focus Facilities. The  guidelines direct notification to owners of the building and land if separate  from the holder of the provider agreement and described such owners as  an “accountable party.”
PECOS chain information was not straightforward and sometimes  was incomplete. PECOS was established in part to make provider-chain  associations clear, but we found that making these associations in PECOS  was not straightforward because of the way the data were collected; in  addition, the chain data were sometimes incomplete. Rather than  requiring providers to report all of the homes that are part of the same  chain, CMS requires each home to report its chain home office. The chain  home office is the entity responsible for providing centralized  management and administrative services to providers under common  ownership and common control.
When we reviewed the chain data in PECOS for the six PI-owned chains  for which we had information, we found that most, but not all, of the  homes belonging to the same chain could be identified through their chain  home office information, in particular by using the name of the chain  home office administrator. Not all homes within the same chain were  associated with the same chain home office. For example, most of the  homes in the Trilogy Health Services chain were divided among three  different chain home offices. The three groups of homes could not be  effectively linked by the chain home office name or address fields in  PECOS, but they did share the same chain home office administrator. CMS  officials told us that the one way they have to link homes reported under  different chain homes offices is if the homes have the same chain home  office administrator listed. However, in some cases, homes belonging to  the same PI-owned chain were reported under different chain home  offices with different chain home office administrators, which can make  linking all of the homes belonging to the same chain more challenging.  Table 3 shows chain information in PECOS for the six nursing home  chains we examined.
In addition to the difficulty of using PECOS to identify all homes in a  chain, we found that one large PI-owned chain did not report chain home- office information for more than 200 homes. Officials from the nursing  home chain indicated that when the chain was acquired by the PI firm,  most of the nursing homes were set up under separate licensees and had  not yet been branded with the chain name, so the company made the  decision not to report these homes as part of a chain. The officials said  they have since reversed this decision and are in the process of updating  the chain information for these homes. They noted that prior to the  acquisition by the PI firm, they reported all the homes in the chain under  one chain home office.
section_title: Completeness and Accuracy of Provider Reported Ownership Data Is Difficult to Verify and CMS Contractor Performance May Contribute to Problems in PECOS Data
paragraphs: Some of the problems we observed with the ownership and chain data in  PECOS are due in part to CMS’s limited ability to recognize when the  information reported by providers is incomplete or inaccurate. CMS’s  contractors have several responsibilities for verifying information reported  on the Medicare enrollment application. For example, contractors are  required to check that the reported legal business names and tax  identification numbers of providers and organizational owners match  those in Internal Revenue Service documentation. CMS contractors are  also responsible for following up with providers to resolve missing or  inconsistent information. For example, a CMS official explained that if  contractors independently came across ownership associations that  should be reported, the contractor should contact the provider. A CMS  official acknowledged, however, that the agency and its contractors may  not always be aware of missing or inconsistent information. For example,  the CMS official confirmed that the agency would not necessarily know if  a provider’s chain affiliation was not reported. One CMS official  explained that the agency does not have the resources to delve into the  relationships of the entities reported to identify if there are any more  owners not being reported. The official explained that CMS relies on the  ownership information that is self-reported to CMS and that the agency is  not “looking behind” what is reported to verify that the ownership  information is complete.
Contractor performance may also contribute to the completeness of the  data in PECOS. As noted earlier, representatives of one nursing home  chain told us that its CMS contractor instructed them to report only two  levels of ownership above the nursing home provider, resulting in several  entities going unreported as owners for many of the homes. In another  example involving the same contractor, chain information was not  reported for more than 200 homes. After some investigation, a CMS official  confirmed that, based on the information reported on the Medicare  enrollment application for these homes, the contractor should have  followed up with the provider about the lack of data reported. However,  the contractor’s office responsible for processing this provider’s  applications had since closed, and the current contractor was not able to  ascertain whether this follow up had occurred. Finally, in a third example,  when we noted that a specific organizational owner was not reported for  all homes in a chain, an official from the PI firm that acquired the chain  said this entity was reported on all the Medicare enrollment applications  submitted and suggested that the data may reflect the CMS contractor’s  preference for what is entered into PECOS from the application.
The performance of CMS contractors is overseen by project officers in the  agency’s Center for Medicare Management, which developed a new on-site  audit program to review contractors’ management of provider enrollment  functions. According to a CMS official, the on-site audits are designed to  pick up on instances in which contractors failed to follow up with  providers about missing information on the Medicare enrollment  application. The on-site audits, however, cover all provider types, not just  nursing homes; focus on the processing of the application as a whole, not  on particular sections of the application, such as the ownership sections;  and, according to a CMS official, do not attempt to verify the accuracy or  completeness of the ownership information reported on the application.  According to a CMS official, as of August 2009, the agency had conducted  two on-site audits under the new program. Beyond on-site audits CMS  does not conduct checks on the PECOS database for internal consistency,  such as whether nursing homes reported to be part of a chain in fact have  a common owner reported. A CMS official said the agency would like to be  able to conduct such checks but lacks the necessary resources given other  priorities.
section_title: HHS Has Made Limited Use of Ownership Data, but State Survey Agencies and Others Expressed Interest in Nationwide Data to Improve Nursing Home Oversight
paragraphs: The use of PECOS nursing home ownership data has generally been  limited to the Medicare enrollment process and only CMS’s Division of  Provider and Supplier Enrollment has routine access to the database. State  survey agencies expressed interest in having routine access to nationwide  ownership data, such as the information stored in PECOS because they  lack a systematic way of learning about the performance of nursing homes  in other states with the same owners as those applying to operate in their  states. CMS officials told us that the PECOS database was not developed  with the objective of providing access to external users, such as states or  other offices within HHS. Although these officials indicated that CMS had  no immediate plans to give states access to the database, they are  considering how such access could be provided.
subsections: section_title: HHS’s Use of PECOS Ownership Data Has Been Limited
paragraphs: Within HHS, use of the PECOS ownership data has been limited. Only  CMS’s provider enrollment division has routine access to PECOS data. To  date, the division has focused primarily, but not exclusively, on populating  PECOS and has not developed any standardized internal reports on  nursing home ownership data that could be shared within HHS.  Specifically, ownership data are used when providers apply to participate  in Medicare to screen out individuals or entities that are not approved to  participate in the Medicare program. CMS contractors review the  ownership information to identify if any reported owners are in the HHS  OIG’s Medicare Exclusion Database or on General Services  Administration’s (GSA) debarment list of entities debarred or excluded  from receiving federal contracts. The contractors perform such reviews  when the Medicare enrollment application is submitted and ownership  information is entered into PECOS, but until recently did not perform  subsequent checks as the GSA or OIG lists were updated. During a CMS  program integrity check in June 2009, CMS found individuals and  organizations that were in the OIG Medicare Exclusion Database or on the  GSA debarment list and should have been denied association with a  Medicare provider, but were nonetheless affiliated with active PECOS  enrollment records.
Prior to the enactment of the Patient Protection and Affordable Care Act,  officials in CMS’s Survey and Certification Group told us that they did not  consider ownership when looking at nursing home quality issues. In an  April 2010 letter, however, the group’s director indicated that with respect  to the expanded nursing home ownership disclosure requirements in the  Patient Protection and Affordable Care Act, the group’s responsibilities  include linking quality of care performance information with ownership  data.
Other CMS components and HHS organizations we spoke with also do not  have access to PECOS or similar ownership data and have noted  challenges to oversight and enforcement. For example, the CMS regional  offices we spoke with reported relying on informally collected ownership  information, and several expressed some interest in access to a national  nursing home ownership database, such as PECOS, as a means to identify  quality-of-care problems at homes under common ownership. One regional  office official said it would be helpful to have all ownership percentage  stakes disclosed. Officials from HHS’s OIG division that negotiates quality- of-care Corporate Integrity Agreements with nursing home chains, told us  that they may learn about systemic issues across commonly owned homes  through anecdotes or multiple referrals, but otherwise do not have a  systematic way to determine if the owner of a home it investigates owns  other nursing homes, which might cause the HHS OIG to expand its  investigation. Furthermore, an official from CMS’s Office of Financial  Management said that he often has to rely on Google Web searches to  identify nursing home owners because he does not have access to PECOS  despite his role in financial integrity. A CMS official from the agency’s  Financial Management Systems Group told us that the agency was just  starting a workgroup to examine the PECOS interests of other groups  within CMS and how to provide access to accommodate those groups’  needs. The scope of this workgroup, however, does not extend to  providing access to PECOS to groups outside CMS or other HHS offices,  including OIG.
section_title: State Survey Agencies Used the Nursing Home Ownership Information They Collected for Oversight, and Expressed Interest in Access to a Nationwide Database
paragraphs: While the state survey agencies we interviewed collect and use nursing  home ownership data, that information is limited to nursing homes that  operate in their states, but many nursing home companies operate in  multiple states. Several state officials we interviewed expressed an  interest in nationwide ownership data, such as the information stored in  PECOS, as a means for more effective oversight.
Many state agencies collect nursing home ownership information  primarily through state licensure and renewal applications. Each state is  responsible for establishing its own licensing requirements. Among the  six states we interviewed who used ownership data, agency officials  reported using the information for oversight purposes and to engage  directly with the owners of nursing home chains to improve conditions at  particular homes. For example, officials in Maryland, Illinois, and New  Jersey cited cases where they used ownership information to contact the  owners, including landlords, to address patterns of poor care within a  home or across a chain. A Maryland official said that providing oversight  at the higher chain level is important because they have observed  instances of chain owners shifting staff from other nursing homes to the  home where the state identified problems, resulting in problems showing  up at the homes that lost staff resources.
However, state agency officials in four states we interviewed told us that  they have difficulty obtaining information on chains that operate homes in  other states, even though many nursing home companies operate in  multiple states. As a result, state agencies, which with CMS share  responsibility for nursing home oversight, have limited information about  the poor performance of nursing home owners in other states, including  the owners who currently are applying to operate in their state. With  limited access to ownership data, many of the state officials we  interviewed told us that they learn about owners of poorly performing  nursing homes informally. In a recent case investigated for quality and  fraud issues by the Connecticut Attorney General’s Office, officials were  only able to learn about a nursing home chain’s complex ownership  structure, including the 44 related entities that owned the nursing homes,  through bankruptcy documents. Connecticut state officials noted that they  rely on gathering information on out-of-state owners from other states on  a case–by-case basis.
State agencies we spoke with expressed strong interest in routine access  to national nursing home ownership data, such as PECOS, as a means for  more effective oversight of entities controlling nursing homes. Officials  in one state told us access to PECOS would enable them to check the  ownership information nursing homes submit to the state and compare it  to what homes are reporting to CMS. CMS officials confirmed that states  do not have access to the PECOS database and, in fact, it was not  developed with the objective of providing access to external users, such as  states or other offices within HHS. According to CMS officials, states  may request specific information in PECOS, such as a list of all nursing  homes owned by a specific individual or entity, but no such requests have  been made. As noted earlier, the agency has not developed any  standardized reports on nursing home ownership that it could easily share  with states. Rather, it would respond to each request on a case-by-case  basis. Recognizing the growing interest in PECOS data, CMS is  considering whether and how it could provide access to external parties,  such as states. The official responsible for this effort said that it is a long- term project.
Several state officials and a nursing home patient advocate told us that  nursing home ownership information should be readily available to the  public. The Patient Protection and Affordable Care Act requires that  ownership and control information be publicly available no later than 1  year after the promulgation of final regulations that implement expanded  collection of such data. Even prior to this act, federal law required CMS to  make ownership information available to the public upon request.  According to a CMS official, the agency has responded to public requests  for nursing home ownership information by providing copies of individual  Medicare enrollment applications after redacting any privacy protected  information, such as owners’ Social Security numbers. CMS has received  some extensive requests for information stored in PECOS, but when  individuals were told the cost of redacting privacy protected information,  the requests were withdrawn.
We found that five of the six state agencies we interviewed—California,  Illinois, Maryland, New Jersey, and Texas—have posted or are in the  process of posting some of the statewide nursing home ownership  information they collect on publicly available Web sites. According to a  Maryland official, the state decided to post detailed nursing home  ownership information on its Web site because it concluded that access to  ownership information was a “consumer issue” and that residents and  their families had a right to know who owns any given nursing home. New  Jersey survey agency officials told us that the state had enacted a law in  2007 giving the public access to state-collected nursing home ownership  information because a nursing home resident’s family wanted to move a  relative to a nursing home with a different owner but found that they could  not identify which nursing homes were owned by which owners.
section_title: Conclusions
paragraphs: Consistent with the name private investment, the information on PI  nursing home acquisitions is private—limited to what such firms choose  to release. We found that the identification of PI firm nursing home  acquisitions was difficult and that CMS’s PECOS database had limitations  in identifying and helping users to decipher PI nursing home ownership  structures. The ability of PECOS to shed any further light on these  acquisitions is undermined by several factors, including the increasing  complexity of nursing home ownership structures since the development  of requirements for reporting such data, CMS’s focus on populating  PECOS with limited oversight of the reporting and recording of the data,  and limited use of the data. State experiences with the collection, use, and  public disclosure of ownership data provide insights on how HHS could  address these limiting factors. Moreover, our findings can help inform HHS  as it develops regulations to implement the Patient Protection and  Affordable Care Act and refines the Medicare enrollment application and  PECOS to reflect the expanded reporting requirements on nursing home  ownership and control contained in the act.
subsections: section_title: PECOS Database
paragraphs: Because limited information is available about companies that are not  publicly traded, the acquisition of nursing homes by PI firms underscores  the need for complete, accurate, and clear ownership and chain affiliation  data. PECOS does not include information on the business type of  organizational owners that would identify them as PI firms, making our  research and the cooperation of PI firms essential to examining PI  ownership and chain affiliation in the database. When we reviewed the  data in PECOS for homes we knew were PI-owned, we noted the following  limitations:    Numerous owners were reported for each home with no information on  the hierarchy of, or relationship among, the owners. However, some states  that collect ownership data do attempt to capture the hierarchy of the  ownership structure.
Three of the six PI firms we reviewed were not listed in PECOS as the  owners of any of the nursing homes they acquired and an entity readily  identifiable with a fourth firm was listed as the owner for less than   20 percent of its homes. We were not able to ascertain whether or not all  of these PI firms were required to be reported. However, the goal of  collecting ownership and control information is undermined if all entities  with reportable ownership or control interests are not reported, including  the ultimate owners.
Information on individual ownership is collected separately from, and is  not linked to, organizational owners. Further, providers are not required to  report individuals who are partners, officers, or directors above the  nursing home provider levels, such as members of the board of directors  who provide strategic direction to a nursing home chain.
Homes belonging to the same chain were not always associated with the  same chain home office, requiring us to link homes through the use of  other data elements, such as the address of the chain home office or the  chain home administrator.
In addition, confusion about what was required to be reported on the  Medicare enrollment application and CMS contractor performance  contributed to problems with PECOS data. Although it may be difficult for  CMS’s contractors to recognize when the information reported by  providers is incomplete or inaccurate, oversight of these contractors with  respect to their verification of ownership data is limited. The importance  of CMS oversight is demonstrated by the fact that PI firms told us that   (1) some of the data we found missing on the application had been  submitted to CMS’s contractor or (2) data were missing because they were  following their contractor’s instructions.
Provisions in the recently passed Patient Protection and Affordable Care  Act may provide an opportunity to address some of the problems we  found. For example, the act requires that the organizational structure of  what are termed “additional disclosable parties” be provided along with  descriptions of the relationships of these parties to the nursing home and  to each other. More detailed information on persons and entities with an  ownership or control interest would clarify the relationships among some  of the organizational owners listed in PECOS. The act also requires  providers to identify members of the governing body of the nursing home.
section_title: Use of PECOS Data
paragraphs: Only CMS’s Division of Provider and Supplier Enrollment has routine  access to PECOS and this division has been largely focused on populating  the database, which was about 81 percent complete as of July 2010.  Although this division has made limited use of nursing home ownership  data, CMS recognizes that other groups within the agency may have an  interest in such data and has started a workgroup to study the issue. In  addition, state survey agencies have expressed interest in more routine  access to nationwide ownership data to improve nursing home oversight.  For example, one state official told us that the state had made state- collected nursing home ownership data publicly available because  consumers had a right to know if the owner of a home operated other  nursing homes. Currently, CMS addresses both state and public requests  for nursing home ownership data on a case-by-case basis and is unable to  give states direct access to the database. CMS is aware of state interest in  PECOS data and is beginning to think about how to provide such access.  Although the utility to states and consumers of the ownership information  in PECOS in its present state is debatable because the information is  sometimes hard to decipher, the implementation of the Patient Protection  and Affordable Care Act provides CMS with an opportunity to collect  meaningful ownership information and to make it available in an  intelligible way.
section_title: Recommendations for Executive Action
paragraphs: We are making 11 recommendations to the Secretary of HHS and the  Administrator of CMS.
As the Secretary of HHS develops regulations to implement the expanded  nursing home ownership reporting and disclosure requirements contained  in the Patient Protection and Affordable Care Act, we recommend that the  Secretary, given the complex arrangements under which nursing homes  can be acquired and operated, consider requiring the reporting of the  following five types of information:  the organizational structure and the relationships to the facility and to one  another of all persons or entities with direct or indirect ownership or  control interests in the provider (as defined in the act), such that the  hierarchy of all intermediate persons and entities from the provider level  up to the chain and the ultimate owner is described; for entities reported as having ownership or control interests, specify  whether or not the entities have an operational role; for example, special  purpose entities created solely for the purpose of acquiring the nursing  home but having no operational role should be identified as such; the percentage ownership interest in the provider for all entities and  individuals who have an ownership or control interest (as defined in the  act);  the names and titles of the members of the chains’ governing body; and the organizational affiliation of individuals with an ownership or control  interest (as defined in the act).
To ensure proper administration of current reporting requirements, we  recommend that the Administrator of CMS issue guidance on the  circumstances under which the holder of a security interest in a provider  may be considered to have a reportable interest.
To ensure that all providers that belong to the same nursing home chain  can be readily identified, we recommend that the Administrator of CMS  require each provider to report the identity of other nursing homes that  are part of the same chain.
To improve the usability and accuracy of the ownership and control  information collected and stored in PECOS, we recommend that the  Administrator of CMS take the following three actions:    Expand the scope of CMS’s existing workgroup intended to make PECOS  data available within the agency by developing a comprehensive strategy  for disseminating PECOS data to HHS, states, and the public; for example,  CMS could develop and make available standardized reports on  nationwide ownership data and could include ownership information on  its Nursing Home Compare Web site.
Examine state systems to identify best practices for the collection and  public dissemination of nursing home ownership and chain information,  including ways in which states make the hierarchy among owners more  apparent.
More closely monitor the activities of CMS contractors that review the  ownership and control information submitted by providers that participate  in Medicare and Medicaid to help ensure its accuracy and completeness.
To help ensure that the requirements for the collection of ownership and  control information from nursing home providers that participate in  Medicare and Medicaid keep pace with evolving ownership structures, we  recommend that the Administrator of CMS periodically review the  requirements related to reporting on the agency’s provider enrollment  form to ensure that it promotes accurate and complete reporting of  nursing home ownership information consistent with the statute.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to HHS for comment and also invited the  nine PI firms that cooperated with our study to review the draft. In its  written comments, HHS concurred with all 11 of our recommendations  and provided CMS’s response to those recommendations. HHS’s  comments are reproduced in appendix II. In addition, five of the nine PI  firms reviewed the draft and provided oral comments. Officials from some  of the firms noted that our report offered a fair and balanced depiction of  the subject matter, but some PI firm officials also expressed concerns  about how PI firms were portrayed. Two of the six state survey agencies  we interviewed provided technical comments on relevant excerpts of the  draft report, which we incorporated as appropriate.
CMS concurred with all of our recommendations and said that it planned  to implement them in various ways, including through the development of  new regulations or revisions to the Medicare enrollment process.  Specifically, CMS said that it would    consider mandating the reporting of the five types of information we  specified in our recommendations, such as the names and titles of the  members of the nursing home chain’s governing body, when developing  regulations to implement the expanded ownership disclosure and  reporting requirements in the Patient Protection and Affordable Care Act;  require reporting of the holders of a security interest in a provider and  identifying all the homes belonging to the same chain through revisions to  the Medicare enrollment application and instructions;   develop a strategy for examining the wider dissemination of ownership  information, as well as an action plan for contacting states about their  collection and dissemination of ownership and chain information;   conduct additional monitoring of CMS contractors to include, but not be  limited to, evaluating the ownership and control information submitted  with enrollment applications as part of annual reviews of the enrollment  process, other focused reviews of provider enrollment, and general  contract oversight; and   periodically review the Medicare enrollment application to ensure it is  updated to reflect complete reporting of nursing home ownership  information consistent with the statute.
CMS also provided several technical comments, which we incorporated as  appropriate.
subsections: section_title: PI Firms
paragraphs: Officials from two of the five PI firms that provided oral comments said  our report provided a fair and balanced depiction of PI ownership of  nursing homes. Officials from one firm said the report described real- estate-only acquisitions well and officials from the other PI firm  considered the report to be a thorough and comprehensive treatment of  the subject matter. In general, PI firm officials commented on our  portrayal of the firms, the data in PECOS on the nursing homes they  owned, and expanded nursing home ownership reporting requirements in  the Patient Protection and Affordable Care Act.
Portrayal of PI firms. Officials from some PI firms expressed concerns  that our report implied that PI ownership of nursing homes was somehow  unique and therefore warranted special scrutiny. Officials from one firm  stated that there was little difference between nursing homes owned by PI  firms and those owned by public shareholders, beyond SEC reporting  requirements for the latter. For example, officials from one firm noted that  all homes, regardless of ownership, are subject to state licensure and  disclosure requirements and routine surveys to ensure compliance with  federal quality standards. Officials representing two firms also commented  that the use of complex ownership structures is not unique to companies  owned by PI firms. One official made the point that the nursing home’s  ownership structure prior to its acquisition by a PI firm was in many ways  just as complex and not at all unusual for a public company. Other  officials noted that multiple layers of ownership exist across the corporate  world and are not particular to the nursing home industry or to health  care. Similarly, officials at one firm wanted us to note that PECOS  ownership data and chain affiliation are hard to decipher for all nursing  homes, not just those owned by PI firms. Because our study focused on  the ownership of nursing homes by PI firms and how PI nursing home  ownership was captured in PECOS, we did not examine how PECOS  captures the ownership of nursing homes by other entities. As a result, our  conclusions were limited to the complexity of PI ownership structures and  the limited ability of PECOS to help to clarify the relationships among the  entities and individuals reported as having an ownership or control  interest.
PI firms’ PECOS data. Officials representing two PI firms were  concerned that our report implied that the ownership information in  PECOS was not clear or was problematic because providers did not  submit necessary information to CMS. Officials at one firm also thought  the tone of the report suggested that PI firms were trying to hide  information and stressed that they had disclosed all required information  and were very forthcoming with information. Officials representing two PI  firms also said that there was no way for firms to see whether the  information they provided on the Medicare enrollment application was  correctly entered into PECOS. Nursing home providers now have the  option of using CMS’s internet-based PECOS to submit, change, and view  their enrollment information online, but we did not review this system,  which was implemented for nursing homes in April 2009.
Our finding that the ownership data in PECOS were hard to decipher  focused in large part on shortcomings in the collection of data for PECOS,  such as the lack of information on how entities and individuals with  reported ownership or control interests are related. We also found that in  one case complete ownership information was not reported for homes in  one PI-owned chain in part due to incorrect advice provided to a PI firm  by a CMS contractor. In another instance, PI ownership was not reported  because it may not have been clear that entities with a security interest  should be reported. Finally, chain home office information, which is  required to be reported was missing for most of the homes in the chain  acquired by one PI firm. An official with the nursing home chain said that  the company had separately provided information on the homes in the  chain it acquired to another office in CMS but that this information had not  been integrated into PECOS. The official commented in general about  problems with information being siloed at CMS in separate data systems.
Patient Protection and Affordable Care Act. Officials representing  two of the PI firms noted their support for the expanded ownership  reporting requirements included in the Patient Protection and Affordable  Care Act, but officials at these firms also expressed caution on which  entities or individuals should be subject to disclosure and how detailed  reportable ownership data should be. For example, officials with one firm  told us that decision makers, but not necessarily all owners or investors,  should be reportable, and in particular, they did not believe that owners  they considered passive investors, such as public pension funds, should be  reported. An official from this PI firm suggested that what should matter  from a policy perspective is the entity responsible for the care provided  (the nursing home company) and the entity that controls it (the private  investment firm). An official with another PI firm stressed the importance  of a reporting system that makes clear which entities control or play a role  in decision-making, and that even a system that displays a hierarchy and  ownership percentages may not adequately reflect this role. The official  stated that a designation such as managing partner denoted an entity with  decision-making responsibility. We recommended that HHS consider  requiring providers to identify whether reported ownership entities have  an actual operational role, which we believe would help address this issue.
An official representing another PI firm expressed a different view and  said that CMS needs to capture more detailed ownership information  similar to what some states collect so that it has complete information on  all ownership layers. This comment is consistent with our  recommendation that CMS examine states systems to identify best  practices for the collection of nursing home ownership information.
The PI firms also provided technical comments, which we incorporated as  appropriate.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the Secretary of Health  and Human Services, the Administrator of the Centers for Medicare &  Medicaid Services, and appropriate congressional committees. In addition,  the report will be available at no charge on the GAO Web site at  http://www.gao.gov.
If you or your staff have any questions about this report, please contact me  at (202) 512-7114 or at dickenj@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made key contributions to this report are  listed in appendix III.
section_title: Appendix I: Summary of Six PI Firms’ Responses about Their Interest and Involvement in Nursing Homes
subsections: section_title: Most of the Six PI Firms That Responded to Questions Described Similar Investment Rationales and Were More Involved in Operations after Acquiring a Chain Than after Acquiring Real Estate Only
paragraphs: Of the six firms that responded to our questions, most described similar  investment rationales. While leasing arrangements with nursing home  operators may have the potential to influence the operations of the homes,  firms that acquired a chain reported that they were more involved in  nursing home operations than firms that acquired real estate only. Table 4  summarizes PI firm responses on such issues as the time frames for  closing out their investments, or exit strategy, and being on the board of  directors of the nursing home chain.
Investment Rationale. Four of the six PI firms (firms A, B, C, and D)  acquired nursing home chains, and officials at all four described increased  demand for long-term care due to an aging population as their attraction to  those investments. To help meet demographic demand, officials at firms A  and D said they sought high-quality chains that focused on providing post- acute care to high-acuity patients (those with clinically complex problems)  and indicated that these chains had top notch management already in  place. An official at firm C said the firm was attracted by the  improvements it could make to the nursing home chain.
Officials at all four PI firms characterized their investments as “long term,”   but the number of years they planned to hold the investments differed.  Officials at firm A said they planned to hold their investment 3 to 9 years,  during which time the firm intended to expand the number of patients the  chain served to meet the long-term growth potential of the industry. An  official at firm C indicated that it was likely the firm would maintain its  investment in the chain for at least 20 years. Officials at firms B and D did  not specify a range or number of years.
Structural Changes. Officials at firms A and C said they divided the  operations and the real estate into separate companies for tax or financing  purposes but kept those companies under common ownership. An official  at firm C explained that the creation of separate operating and real estate  companies was designed to attract investors who wanted exposure to only  one side of the nursing home company. In hindsight, however, the official  said that the separate entities created for the acquisition were not worth  the legal costs and reporting requirements and that the firm planned on  collapsing the operating and real estate companies to simplify the  organizational structure. Officials at firms B and D did not mention any  changes to the organizational structure of the chains they acquired.
Officials at firms A and C explained the benefits from having operations  and real estate under the same chain ownership. An official at firm A  stated that it was unlikely that the real estate could be converted to  another use and that therefore it made sense for the nursing home  operator, who is licensed to run the home, to own the real estate. An  official noted that an operating company that does not own its real estate  is unable to use the property as collateral for a loan. Finally, officials at  this PI firm told us that the chain’s common ownership structure should  reassure patients that the chain would take responsibility for any  problems that occur. An official at firm C said that the chain leases some  of its nursing homes from unaffiliated real estate owners but that it  planned to cease operations at those locations if it was unable to purchase  the real estate. Another firm official noted that tension over responsibility  for improvements can arise in any industry with unaffiliated operating and  real estate companies—leaving the operator with less incentive to make  those improvements. One real-estate-only acquirer strongly disagreed with  this statement and noted that a landlord with a triple net lease has a great  incentive for ensuring the real estate is appropriately maintained. This firm  said such leases clearly state the responsibilities of the real estate owner  and the operator with respect to facility improvements and said that  disagreements have been few and limited.
Involvement in Nursing Home Operations. Officials at all four PI firms  that acquired a chain said that they held seats on the chains’ boards of  directors. In general, they characterized their involvement as related to the  strategic direction of the chain and indicated that they are not involved in  day-to-day operations. They noted that the updates they receive at board  meetings help to guide their decisions for the strategic direction of the  chain.
Strategic direction. Officials at all four PI firms described the chain’s  executive management as the ultimate decision maker for the chain, and  officials at firms A, B, and D indicated their involvement in nursing home  operations primarily ensured that the chain continued the objectives it  already had set for itself. Officials at firm A said they had helped the chain  implement an ongoing transformation from a focus on custodial care to  becoming primarily a provider of postacute care and rehabilitative  services to higher acuity patients. This official said that the board of  directors ensured that the staff at the facilities could meet this goal.  Although the nursing home chain already had this goal in place as a  publicly traded company, officials at the PI firm said that they helped to  achieve this goal by allowing the chain to make investments more quickly.  They also emphasized that the chain does not turn away residents to meet  its strategic objective.
Management changes. Officials at firms A, B, and D said they kept the  same executive management after they acquired the chain because the  chain was already well managed. An official who worked at the chain prior  to firm A’s acquisition told us that the firm helped hire more regional  office managers and more managers overall but also felt that minimal  organizational changes had occurred after acquisition by the PI firm. In  contrast, an official at firm C believed that the chain the firm acquired had  quality of care challenges and later hired a physician as chief executive  officer. An official at this firm indicated that the firm’s goal was to help  transform the nursing home industry and, as a result, the firm recruited  managers that held the same values.
Quality-of-care monitoring. Officials at two firms gave specific examples  of how they oversee quality of care. An official at firm C told us that the  firm helped its chain introduce best practices and standardized training to  nursing home staff. According to firm officials, the firm directed capital to,  among other things, hire directors of clinical education, train facility staff  to focus on the awareness of each patient’s individual needs, and reduce  staff turnover. One senior official at this chain said that all the personnel,  from the caregivers to management, have gone through a significant  cultural change since the PI firm had acquired it. An official at the firm  said that if the firm had not purchased this particular chain, a different PI  firm would have taken over and he believes that the quality of care would  have suffered. However, an official of the firm emphasized that each  nursing home within the chain made more decisions about the care  provided inside the home than did the chain’s board of directors.
Officials at another firm explained that they receive reports on quality of  care—including CMS’s 5-star ratings—to help guide management  decisions. The firm helped create an Independent Quality Committee to  provide the board with independent expert guidance on reading and  assessing quality of care data. After examining the data, the board  discusses how to address problems. An official with the chain said that it  can take underperforming homes and improve them by sharing resources  across the chain.
Capital improvements. Officials at all four PI firms indicated that they  were directly involved in capital improvements or expansion plans for the  chains they acquired. Firm A said it helped the chain to undertake  investments that furthered the chain’s long-term expansion strategy. This  chain has sought approval from state governments to build several new  facilities. Firm B said it mainly helps with decisions about the nursing  homes’ capital structure and the capacity to fund the development of new  homes.
subsections: section_title: PI Firms That Made Real- Estate-Only Acquisitions
paragraphs: Investment Rationale. Three of the six PI firms (firms D, E, and F) made  real-estate-only acquisitions. Officials of firms D and E described  increased demand in long-term care due to an aging population as a factor  that attracted them to those investments. For example, officials at firm D  said the business and organizational models they developed brought  needed investment into the nursing home industry after a decline in the  late 1990s. Similarly, officials at firm E said that no new nursing homes  had been built in recent years and that the demand for senior housing will  exceed the available supply. In contrast, an official of firm F described the  firm’s investments in nursing home real estate as an opportunity to acquire  additional real estate; that is, they did not view their nursing home real  estate acquisitions any differently than their acquisitions of commercial or  residential real estate.
These three firms had different exit strategies for their nursing home real  estate investments. Although officials at firm D described one of their  nursing home real estate investments as “long term,” they did not specify a  time frame. However, they have sold other nursing home real estate  investments in 1 to 5 years from the initial investment.  Officials at firm E  said they acquired nursing home real estate with the goal of selling the  investments at a profit 3 to 5 years later. After declining growth in real  estate value, the firm sold one portfolio of such investments about 2 years  after the initial acquisition and had planned on selling its other portfolios.
In contrast, an official at firm F said the firm’s acquisitions were a  mechanism to collect rent and they had no intention of selling.
Involvement in Nursing Home Operations. The three PI firms that  made real-estate-only acquisitions had no representation on the boards of  the operating companies to which they leased real estate. Through their  lease arrangements with nursing home operators, however, they may have  the potential to influence the operations of the homes.
Lease arrangements. All three PI firms lease the real estate to nursing  home operators under “triple net” agreements. Officials at firm E told us  that triple net leases are the industry standard for nursing homes. Under  these agreements, in addition to rent, the operator agrees to pay all real  estate taxes, property insurance, and maintenance on the property  (including capital costs). These officials said that because the average age  of their facilities was 30 years, they required the operators to make an  annual per-bed deposit for maintenance. This deposit was refunded when  the nursing home operator submitted evidence (paid invoices) that it had  undertaken maintenance.
Firms D and E had leases with the nursing home operators that calculated  a base rent plus rent as a percentage of the operator’s adjusted net income  or excess cash flow—ranging from 35 to 50 percent. Officials at firm E  said that they examined whether an operator could meet the terms of the  lease before they made an initial investment in the property. According to  officials at this PI firm, the major variable that influenced a nursing home  operator was not the operator’s ability to pay debts and rent, but rather  the level of reimbursement received for resident care. However, officials at  a PI firm that purchased a nursing home chain told us that such leasing  arrangements can have negative consequences. They explained that the  real estate owner shares profits with minimal risk, but when revenues  decline, nursing home operators are more likely to cut staff to pay the base  rent and to maintain a level of profitability.
Separation of real estate from operations. Officials at firms D and E told  us that the separation of real estate and operations under unaffiliated  companies benefited the operator by allowing greater access to capital for  the nursing home. Officials at firm D said that they purchased nursing  homes and separated the entities that owned the real estate from those  that operated the facilities. They said they created this structure to attract  financial lenders and investors back to the nursing home industry and  reduce the risk associated with the closure of facilities because of high  insurance premiums resulting from litigation. According to officials at this  firm, this structure still ensured that the legal process could reach an  accountable party to help address potential quality-of-care problems.
Quality-of-care monitoring. While officials at all three firms reported that  they do not tell the nursing home operators to whom they lease how to run  their businesses, officials at firms D and E monitored the operators’ quality  of care. Officials at both firms said that good quality of care resulted in  good financial outcomes. They indicated that they would consider  terminating a lease if poor or declining care persisted, but officials at  neither firm said they had encountered such a situation. Officials at firm D  said their involvement at the operating level is typically limited to  oversight of their tenants through an affiliated asset management  company. The asset managers are expected to monitor compliance with  the lease, perform financial reviews and analyses, conduct on-site  inspections of each facility’s physical plant, and continuously review each  facility’s clinical performance. Officials at firm E said that the terms of  their leases required nursing home operators to have plans of correction  that addressed quality-of-care problems. Officials at this firm told us that  they have clinical staff to help them interpret state survey reports of the  nursing homes to which they lease real estate. If clinical care declined  below a certain point at a home, the officials said that they would increase  their monitoring. While these officials said they would ask the home’s  operator how it planned to address resident care problems, they  emphasized that they would not tell the operator what to do.
In the more than 5 years they had owned nursing home real estate, an  official at firm F told us that the firm had not monitored the quality of care  provided by the operators to whom it leased facilities. However, the  official said the firm would like to start monitoring operations, because— unlike their other commercial investments—they do not manage the  operations of their nursing homes. Should an operator lose its state license  to operate a nursing home, the official of the firm told us that their  investment would be at risk, because it can be difficult to identify a new  nursing home operator or to convert the property to another use. Although  the official at this firm said the firm would intervene before an operator  lost its license, the firm did not consider monitoring quality of care until  approached by an independent third party that said it could help interpret  operators’ state survey results.
section_title: Appendix II: Comments from the Department of Health and Human Services
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Acknowledgments
paragraphs: In addition to the contact name above, Walter Ochinko, Assistant Director;  Jennie Apter; Ramsey Asaly; Joanne Jee; Dan Lee; Linda McIver; Luis  Serna; Amy Shefrin; and Jessica Smith made key contributions to this  report.
section_title: Related GAO Products
paragraphs: Poorly Performing Nursing Homes: Special Focus Facilities Are Often  Improving, but CMS’s Program Could Be Strengthened. GAO-10-197.  Washington, D.C.: March 19, 2010.
Nursing Homes: Addressing the Factors Underlying Understatement of  Serious Care Problems Requires Sustained CMS and State Commitment.  GAO-10-70. Washington, D.C.: November 24, 2009.
Nursing Homes: Opportunities Exist to Facilitate the Use of the  Temporary Management Sanction. GAO-10-37R. Washington, D.C.:  November 20, 2009.
Nursing Homes: CMS’s Special Focus Facility Methodology Should Better  Target the Most Poorly Performing Homes, Which Tended to Be Chain  Affiliated and For-Profit. GAO-09-689. Washington, D.C.: August 28, 2009.
Medicare and Medicaid Participating Facilities: CMS Needs to  Reexamine Its Approach for Funding State Oversight of Health Care  Facilities. GAO-09-64. Washington, D.C.: February 13, 2009.
Nursing Homes: Federal Monitoring Surveys Demonstrate Continued  Understatement of Serious Care Problems and CMS Oversight  Weaknesses. GAO-08-517. Washington, D.C.: May 9, 2008.
Nursing Home Reform: Continued Attention Is Needed to Improve  Quality of Care in Small but Significant Share of Homes. GAO-07-794T.  Washington, D.C.: May 2, 2007.
Nursing Homes: Efforts to Strengthen Federal Enforcement Have Not  Deterred Some Homes from Repeatedly Harming Residents. GAO-07-241.  Washington, D.C.: March 26, 2007.
Nursing Homes: Despite Increased Oversight, Challenges Remain in  Ensuring High-Quality Care and Resident Safety. GAO-06-117.  Washington, D.C.: December 28, 2005.
Nursing Home Quality: Prevalence of Serious Problems, While  Declining, Reinforces Importance of Enhanced Oversight. GAO-03-561.  Washington, D.C.: July 15, 2003.
Nursing Homes: Public Reporting of Quality Indicators Has Merit, but  National Implementation Is Premature. GAO-03-187. Washington, D.C.:  October 31, 2002.
Nursing Homes: Federal Efforts to Monitor Resident Assessment Data  Should Complement State Activities. GAO-02-279. Washington, D.C.:  February 15, 2002.
Nursing Homes: Sustained Efforts Are Essential to Realize Potential   of the Quality Initiatives. GAO/HEHS-00-197. Washington, D.C.:  September 28, 2000.
Nursing Home Care: Enhanced HCFA Oversight of State Programs  Would Better Ensure Quality. GAO/HEHS-00-6. Washington, D.C.:  November 4, 1999.
Nursing Home Oversight: Industry Examples Do Not Demonstrate That  Regulatory Actions Were Unreasonable. GAO/HEHS-99-154R. Washington,  D.C.: August 13, 1999.
Nursing Homes: Proposal to Enhance Oversight of Poorly Performing  Homes Has Merit. GAO/HEHS-99-157. Washington, D.C.: June 30, 1999.
Nursing Homes: Complaint Investigation Processes Often Inadequate to  Protect Residents. GAO/HEHS-99-80. Washington, D.C.: March 22, 1999.
Nursing Homes: Additional Steps Needed to Strengthen Enforcement of  Federal Quality Standards. GAO/HEHS-99-46. Washington, D.C.:   March 18, 1999.
California Nursing Homes: Care Problems Persist Despite Federal and  State Oversight. GAO/HEHS-98-202. Washington, D.C.: July 27, 1998.