The New York Times reported on January 2, 2018, that according to financial disclosures to Medicare, nursing home contracts with related companies accounted for $11 billion of nursing home spending in 2015. According to the report, this amounts to a tenth of nursing home costs. The basis of the Times report was an analysis undertaken by Kaiser Health News. The Times article, which focused on care problems encountered by a family at a New York nursing home, was critical of related-company arrangements, saying that they allow nursing home owners to arrange contracts where the nursing homes pay more than they might in a competitive market. Further, the article said, owners can “siphon off” profits that are not recorded on the nursing home’s books. The Times report stated that the Kaiser Health News analysis found that nursing homes doing business with related companies (1) employ, on average, 8 percent fewer nurses and aides; (2) were 9 percent more likely to have hurt residents or immediate jeopardy findings; (3) had 53 substantiated complaints for every 1,000 beds, compared with 32 per 1,000 beds where no related party arrangements were in place; and (4) were fined 22 percent more often for serious health violations and penalties at an average of $24,441, a rate 7 percent higher than homes with no related-party arrangements. The Kaiser analysis also found that for-profit nursing homes use related company arrangements more frequently than nonprofit corporations.
On August 1, 2011, the Centers for Medicare & Medicaid Services (CMS) and the U.S. Department of Health and Human Services (HHS) released a Final Rule updating the prospective payment rates for inpatient rehabilitation facilities (IRFs). The rule also establishes a program that reduces the annual increase factor by 2 percent for failure to report quality data to HHS starting in 2014. The Final Rule implements section 3004 of the Affordable Care Act and will become effective on October 1, 2011.
The Final Rule affecting IRFs was published in the Federal Register on August 5, 2011 and can be found here: http://www.gpo.gov/fdsys/pkg/FR-2011-08-05/pdf/2011-19516.pdf.