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⭒ New Developments

Congress Preparing Nursing Home Legislation

For the first time in 20 years, Congress is considering new nursing home requirements, responding to persistent concerns that wealthy investors are profiteering at the expense of nursing home residents. The New York Times got Congress’ attention on September 23, 2007 when it reported that private investment firms are rapidly buying up large nursing home corporations and cutting staffing and care to increase profits. Click here to read the September 23, 2007 New York Times article: “More Profit and Less Nursing at Many Homes”

In addition to the Times’ report, other recent studies report that large investment firms are endangering residents by squeezing profits from funds intended for care and are using elaborate schemes to hide their assets and shield themselves from liability. Investment firms have purchased several large chains including Beverly Enterprises and Mariner Health Care. The Carlyle Group, an enormous investment company, is currently completing its $6.3 billion takeover of HCR Manor Care, the nation’s largest nursing home chain.

Congress has not considered major nursing home legislation since 1987, when it enacted the landmark Nursing Home Reform Act. Despite that law’s lofty expectations of nursing homes, the quality of resident care is not improving due to inadequate staffing, neglect by many nursing home operators, and poor enforcement by state and federal officials.

On November 15, Congress held two hearings on these issues, one by the House Ways and Means Subcommittee on Health and the other by the Senate Special Committee on Aging. More hearings are expected in the weeks ahead.

In announcing the Ways and Means hearing, Subcommittee Chairman Pete Starks of California stated: “It’s been far too long since Congress has focused on nursing home quality issues. I am concerned about quality issues and lack of accountability, particularly as more and more beneficiaries are now living in private equity–owned homes.” Hearing witnesses included Professor Charlene Harrington of UCSF, who testified that shocking cuts to registered nurse staffing since 2000 have reduced nursing home quality.

At the Senate Special Committee on Aging hearing, its chairman, Senator Kohl, announced that he and Senator Grassley were preparing legislation to increase transparency on nursing home ownership and staffing and to strengthen enforcement of nursing home standards. Committee witnesses recommended various other reforms, including improvements to Medicare’s Nursing Home Compare website, stronger civil fines and better collection practices, use of immediate corrective actions, systematic evaluation of nursing home chains, and minimum federal staffing standards. Several national advocacy organizations jointly submitted additional recommendations, many of them matching reforms CANHR is seeking in California.

Members of Congress are also seeking official investigations about the conduct of private investment firms. Senator Grassley and Senator Clinton each sought investigations by the U.S. Government Accountability Office (GAO). See links below.

Click here to read the October 24, 2007 New York Times article: “Inquiries at Investor–Owned Nursing Homes.” (pdf)

Click here to read Senator Grassley’s October 3, 2007 press release and letter to the GAO.

Click here to read Senators Grassley’s and Baucus’ October 18, 2007 press release and letters to CMS and private equity firms. (pdf)