Center for Medicare Advocacy

Advancing Access to Medicare and Healthcare

CMA Alert | July 14, 2022

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In this Issue
  1. Medically Necessary Oral Health Coverage Included in Medicare Proposed Rule
  2. Special Report | Nursing Home Closures: Causes and Solutions
  3. New York State’s For-Profit Nursing Facilities’ Related-Party Transactions Hide High Profits
  4. Free Webinar | Medicare Enrollment Matters
  5. Discover How We Can Protect & Improve Medicare Together

Medically Necessary Oral Health Coverage Included in Medicare Proposed Rule

Last week the Centers for Medicare & Medicaid Services (CMS) released the 2023 Medicare Physician Fee Schedule (PFS) proposed rule, with publication in the Federal Register expected on July 29, 2022. It includes a proposal to broaden reimbursement for medically necessary dental services and seeks comments on various circumstances in which coverage would be appropriate. The Center for Medicare Advocacy will provide summaries of the proposed rule, template comments and additional information in the weeks ahead. Comments are due to the CMS by Sept. 6, 2022.

Additional Resources:

Special Report | Nursing Home Closures: Causes and Solutions

Nursing home closures are not a new phenomenon.  Nursing home owners, executives, and their trade associations, however, treat closures like a new problem that threatens residents.  They predict that many more facilities will close if they are not given more money.  They also blame workforce shortages for closures.  As a new Special Report from the Center for Medicare Advocacy illustrates, some closures have been the result of facilities’ closing due to their exceptionally poor quality and consistently low occupancy rates.  Other closures have been the deliberate result of states choosing to “rebalance” their long-term care systems to increase non-institutional, home and community-based alternatives to nursing homes.  While closures often raise serious issues for residents who are displaced from their homes, solutions set out by nursing home owners, executives, and trade associations are stale and predictable.  A more comprehensive and effective approach to the nursing home industry would stabilize the nursing home workforce, effectively address the poorest quality facilities, and ensure that reimbursement is used for resident care.

New York State’s For-Profit Nursing Facilities’ Related-Party Transactions Hide High Profits

A new report by the Empire Center (an independent, non-partisan, non-profit think tank based in Albany, New York) finds that nearly three-quarters of New York’s for-profit nursing facilities (72%) “structure themselves as networks of interlocking companies” that “disguise the true profitability of their businesses.”  In 2020, companies related to the state’s for-profit nursing homes (“related-party” companies) reported $306 million in profits from $1.6 billion in revenue – a margin of 19.5%. The nursing facilities themselves showed profits of 2.3% in the same year.  The Empire Center calculates that “the owners made twice as much money from related businesses as they did from the nursing homes themselves.”  In other words, related-party transactions reflected two-thirds of owners’ profits for the year.  Most significantly, facilities with related-party transactions spent less money on staffing and had poorer federal quality ratings than not-for-profit or government-owned facilities.

The Empire Center report provides details about one 17-facility chain, one of whose facilities, Van Duyn Center for Rehabilitation and Nursing, is currently being investigated by state Attorney General Letitia James for allegations of abuse and neglect.  In 2020, the two joint owners of the 17 facilities in upstate New York, with a total of 3,100 beds, reported $292 million in operating revenue.  The aggregate profit reported for the 17 facilities in 2020 was $1.7 million, less than one percent of the revenue.  However, the Empire Center reports that the owners made significant profits in other way.  The nursing facilities did business with a dozen related companies, including 11 in which one or both men held ownership stakes.  Profits for the related-party companies were just over $10 million; the share for one owner was $7.2 million and for the other, $2.8 million.  In addition, the Van Duyn facility paid $5.4 million in rent to a limited liability company that appears to be owned by one of the chain’s two owners.  Finally, both owners received salaries from multiple nursing facilities in their chain – $1.1 million to one owner for working a combined 140 hours per week at 11 facilities, just under $1 million to the other, for working a combined 60 hours at 10 facilities.  The Empire Center calculates that the two owners “netted at least $13.8 million in profits and salaries from their combined nursing home businesses,” more than eight times the $1.7 million officially reported as profits.

President Biden’s nursing home reform agenda, announced February 28, 2022, among its proposals, calls for increased transparency of ownership and finances, creation of a new owner/operator database, and increased accountability for chain owners of substandard facilities.

For further information, see:

Free Webinar | Medicare Enrollment Matters

Thursday October 13, 2022 | 2;30 PM – 4:00 PM EDT

This webinar will discuss the 2023 Annual Coordinated Election Period (ACEP), including outreach and education materials issued by the Medicare program, common enrollment pitfalls, options when you miss your Initial Enrollment Period, and other considerations for Medicare beneficiaries and those who assist them. Policy changes and other updates for 2023 will also be discussed.

Register now at https://medicareadvocacy.org/webinars/

Discover How We Can Protect & Improve Medicare Together

As a nonprofit organization, the Center for Medicare Advocacy relies on the generosity of our community to sustain a wide range of advocacy and educational initiatives such as providing these CMA Alerts and our popular free webinars. We give voice to people struggling to be heard; their stories guide our mission and our work.
 
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