Financial Disclosure: Changes in LTPAC Reimbursements Under the Affordable Care Act (Part 2 of 4)



In our previous blog, we discussed how the Affordable Care Act (ACA), also known as Obamacare, included changes to physician reimbursements, specifically with tethering the value and quality of services provided to reimbursements. While defining quality may seem ambiguous, the act makes note of several crucial components, financial disclosure being one of them.


Focus on People, Not Profit

In 2007 and 2008, congressional hearings on nursing home quality, transparency, and accountability found significant evidence for concern that many LTPAC facilities were profiting far more from the operations of their facility than they should have been. However, these same facilities that were making a profit were failing to meet many Medicare, Medicaid, Federal, and state requirements. The 2010 MedPac report to Congress found that the average for-profit margin was 20.7 percent, the 10th consecutive year above 10 percent. This was more than twice the average margin of non-profit facilities, which tend to have higher staffing levels and fewer quality problems. As approximately 69.8% of LTPAC facilities are for-profit facilities (CDC), this dichotomy of profit and quality of care became a central tenet for the Affordable Care Act.


Financial Disclosure

In an effort to ensure quality and proper financial management and care alignment, the ACA (§ 6104) requires providers to categorize expenditures from all payment sources on their cost reports and indicate if the expenses are for: (1) direct care, including nursing, therapy, or medical services; (2) indirect care, including housekeeping and dietary services; (3) capital expenses, such as building and land costs; and (4) administrative services. Under the ACA, CMS was required to redesign Medicare cost reports to capture this information by March 2011; categorize the expenditures by September 2012; and develop procedures to make the information readily available when requested.


Disclosure of Ownership and Financial Relationships

Many for-profit LTPAC facilities are part of multi-unit operations. Over the past several decades, the number of multi-unit, corporate owned facilities has increased drastically, and as they have, ownership has become more and more ambiguous with LLCs and complex corporate organizational structures. This ambiguity had allowed less reputable individuals and organizations to dodge penalties for providing substandard care. For example, the HHS OIG found 17 limited liability companies involved in the ownership of one nursing home it investigated for substandard care (Kaiser Family Foundation). With such a complex system of ownership, it was difficult to hold individuals or corporations accountable for the quality of services and care provided in each facility.


In response to this issue, Section 6101 of the ACA requires LTPAC facilities to disclose, in detail, information about their corporate organizational structure or business entity, information about stakeholders with at least a 5 % ownership interest , information about individuals, officers, consultants, directors, partners, trustees, and other entities that provide other aspects of the facility’s direct or indirect governance, management, administration, operations, finances, operational policies and procedures, and clinical services. Additionally, it required information about persons, entities, or corporations that lease or sublease property to the facility.


The goal of this part of the act is to hold individuals accountable for the quality of service at the facilities from which they are profiting.


The next two blogs will discuss actual standards within these facilities, including accurate staff reporting and qualifications requirements and demonstrating the benefits of information technology in LTPAC facilities.


LINTECH is fully committed to assisting our LTPAC partners in keeping compliant with the ever-changing state and federal regulations. For more information as to how LINTECH’s fully-integrated software solutions and related services can assist your LTPAC facility, please contact us.