Headshot of CMS Administrator Chiquita Brooks-LaSure

The Department of Health and Human Service this afternoon proposed a new nursing home ownership disclosure rule intended to make more clear ownership and management operations of facilities.

The rule also includes private equity and real estate investment trust definitions, which regulators said would set the stage for the disclosure of whether those types of owners or investors play a role in a specific nursing home.  The Centers for Medicare & Medicaid Services said it would launch an updated nursing home enrollment application for public use this summer.

“CMS is committed to using every tool at our disposal to improve nursing home care and identify trends that enhance residents’ quality of life,” Centers for Medicare & Medicaid Services Administrator Chiquita Brooks-LaSure said in a related statement. “If finalized, this rule would strengthen our ability to examine ownership types, including private equity and real estate investment trusts.”

The proposed rule would use part of the Affordable Care Act to require nursing homes enrolled in Medicare or Medicaid — the majority of US nursing homes — to disclose individuals or entities that provide administrative services or clinical consulting services to the nursing homes.

Nursing homes frequently use other companies to provide major services or support, CMS said, “but families currently have no way of knowing which different companies or firms provide care to their loved ones and how they might be connected to the owners of a nursing home.”

The agency said its proposed rule also would require information about entities that lease or sublease property to nursing homes, since the facilities and property owners may be set up as different corporate entities even though they work under the same umbrella.

“This transparency will, among other things, allow families to make more informed choices about the care of their loved ones, and it will enable CMS and others to scrutinize more closely how ownership types correlate with care outcomes and to determine which environments are more likely to deliver better care for residents and patients,” HHS officials said in announcing the proposal.

The rule was pitched as further proof of the Biden administration’s commitment to nursing home quality and transparency. Biden had hinted at more regulation to come in his State of the Union address last week.

He actually planted the seed of today’s announcement a year ago, in his first State of the Union address. At the time, he promised more accountability of “Wall Street” firms that take over facilities and allegedly don’t keep quality standards high enough.

The largest nursing home association in the US, the American Health Care Association / National Center for Assisted Living, assailed the proposed rule’s issuance as a misdirected offensive.

Provider response split on proposal

“We support transparency and appreciate the Administration’s efforts to assist families in making more informed decisions. However, focusing on ownership and private equity is a red herring,” said AHCA/NCAL President and CEO Mark Parkinson in a statement. “Less than 5% of nursing homes are owned by private equity firms and roughly 12% are owned by a REIT, an entity that typically has no influence on daily operations. This has become a distraction from the real issues that impact the majority of providers, like Medicaid underfunding and workforce shortages.

“ If we truly want to improve America’s nursing homes, we need policymakers to prioritize investing in our caregivers and this chronically underfunded healthcare sector,” he added. “Together, we should focus on meaningful solutions that can strengthen delivering the quality of care and services that our nation’s seniors deserve.”  

LeadingAge, an association comprised solely of nonprofit providers and related groups, on the other hand, came out quickly and strongly in favor of the CMS announcement.

“We agree with the administration that ownership and financing of nursing homes should be transparent to help ensure that owners or associated businesses do not profit at the cost of quality care,” said LeadingAge President and CEO Katie Smith Sloan in a statement. “The proposed disclosure and reporting requirements set out in today’s proposed rule are a step in the right direction.

Nonprofit providers have always disclosed ownership information as required by federal tax law on Form 990s that are open to public inspection, Sloan added. 

“LeadingAge members are transparent in their ownership structure and board governance, and are held accountable to their local communities and government at all levels,” she said.

“We value these transparency and accountability obligations because they promote nursing home excellence —and because they strengthen our organizations and the communities that we serve,” she added. “The corporate structures of LeadingAge members promote longevity of ownership through governance by community boards of directors, and are financially sustained through public bond offerings and donations from philanthropists and foundations — though government support is often needed to cover the rising costs of caring for older adults.”

This is a developing story. Please check back for details.