Some nursing home owners and advocates on Monday criticized federal officials for lumping together private equity investors and healthcare-focused real estate investment trusts in a yearlong focus on transparency.

But they appeared to at least tepidly embrace the latest salvo in an ongoing effort by the Centers for Medicare & Medicaid Services to reveal more to the public about ownership, management and related parties.

In a proposed rule announced late Monday, the agency said it would use a tool included in the Affordable Care Act to require more information on nursing home owners, managers and real estate and other partners. It also plans to include 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.

CMS will begin capturing such information in an updated nursing home enrollment application to be used starting this summer, reserving the right to have specified providers complete such paperwork even outside their normal five-year reenrollment cycle.

“I don’t believe our tenants have any concern about additional ownership disclosure. I’ve often publicly stated my support for transparency in ownership,” Rick Matros, CEO of the Sabra REIT, told McKnight’s Long-Term Care News on Monday.

But he joined American Health Care Association President and CEO Mark Parkinson in questioning why administration officials continue to lump together groupings such as private equity and REITs as if they were the same.

“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,” Parkinson said Monday. “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.

Many real estate investment trusts supported the operators who lease properties from them during the pandemic, offering resources and rent concessions in the first two years of the pandemic. Many of the major REITs in the long-term care space are publicly traded and hold earnings calls to discuss investment strategies with the public, posting related financial information for public review. 

And though some do cloak some operators in secrecy, many REITs partner with providers whose operations are at least fairly transparent.

Matros noted that when Sabra transferred the bulk of the North American Health Services portfolio to the Ensign Group, a major Sabra holding, one of the benefits he touted was that Ensign was a publicly held company. Matros said he viewed that transparency of one of the REIT’s two largest tenants as “good for everyone.”

Ownership details, definitions

The rule proposed Monday adds several new definitions that Health and Human Services officials said will “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.”

Those include, but are not limited to, a private equity company, real estate investment trust, additional disclosable party, and organizational structure.

A private equity company would be defined as a publicly traded or non-publicly traded company that collects capital investments from individuals or entities and purchases an ownership share of a SNF. The agency would define a REIT as a publicly-traded or non-publicly traded company that owns part or all of the buildings or real estate in or on which the provider operates.

“We recognize that these definitions may be modestly different from definitions of the same terms used in other settings,” CMS acknowledged.

The rule will also add to efforts launched last year to better understand the role of related parties in nursing home ownership and operational structures.

A “disclosable party” is a person or entity that exercises operational, financial or managerial control over a facility; provides policies or procedures for any of the facility’s operations, or provides financial or cash management services to the facility; or leases or subleases real property to the facility.

Rule long in the making

CMS proposed expanding ownership reporting using the Affordable Care Act as far back as 2011, but did not act then because “we needed more time to consider the comments received.”

The decision to act now was at least partly informed by recent federal watchdog reports that cast blame on CMS for lapses in quality of care and background screening. The agency also noted a growing body of research that has linked private equity investment with declining outcomes.

In particular, the rule cites a 2021 analysis from the Journal of the American Medical Association that found private equity companies seek annual returns of 20% or more and face intense pressure to generate high short-term profits and “reduce staffing, services, supplies, or equipment, which could adversely affect quality of care.” 

“We believe nursing home owners and operators are in a position to address some of the problems referenced in the aforementioned analyses and reports and make operational improvements,” CMS said in a draft version of the rule that appeared on the Federal Register website Monday. “Knowing who these parties are through their disclosures on the Form CMS-855A and to States would: (1) provide additional transparency that may assist CMS and other regulators in holding nursing facilities accountable; and (2) allow consumers to select facilities with better knowledge of their owners and operators.”

The Biden administration has leaned heavily into academic and consumer concerns about private equity-ownership, keying into that as it launched its nursing home reform plan nearly one year ago. At the time, the White House claimed that “(f)or too long, corporate owners and operators have not been held to account for poor nursing home performance.”

“We stress that the above-mentioned concerns about nursing home ownership are not limited to private equity companies,” CMS said in the proposed rule Monday. “Other types of private ownership, such as real estate investment trusts (REITs), have generated similar concerns; indeed, REITs, in addition to private equity companies and other investment ownership structures, were specifically referenced in the February 28, 2022, White House fact sheet.” 

CMS said it intended to make data collected as part of the latest rule publicly available within one year of the rule being finalized. The agency also will consider posting the information on

Comments on the proposed rule must be received by April 14, 2023.