Headshot of Sabra's CEO Rick Matros

A new rule from the Centers for Medicare & Medicaid Service that requires nursing homes to report more details about their owners met with mixed reviews from providers and owners Wednesday.

Providers broadly agreed that the new rule is necessary — or at least that it is an important step toward improving transparency for residents. However, some described the additional reporting requirements as a distraction from more important steps that could improve care quality.

The rule is a diversion from the most important issues, according to The American Health Care Association/National Center for Assisted Living

“We support transparency and appreciate the administration’s efforts to assist families in making more informed decisions,” noted the group in a statement emailed to McKnight’s Long-Term Care News. “However, more paperwork reporting will not drive quality. This has become a distraction from the real issues that impact the majority of providers, like Medicaid underfunding and workforce shortages.”

AHCA’s statement urged further substantive action to address the underlying causes of care quality issues. 

“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.”

Providers, owners endorse

Other groups were less reserved in their support for the new rule.

LeadingAge endorsed the rule as a means of investigating how facility ownership affects care quality. 

“The final rule, which we support, will facilitate further research and analysis of how and to what extent ownership types affect and correlate with outcomes and the quality of care provided to nursing home residents,” said Katie Smith Sloan, president and CEO of LeadingAge, in a statement to McKnight’s . “CMS has committed in the final rule to providing further guidance and examples concerning the scope of data that must be submitted, as well as how the information submitted by providers will be published. We will work closely with the agency on these important issues as it moves toward implementation of the requirements.”

Sloan noted that LeadingAge’s nonprofit members already publicly disclose their ownership and management information through the Internal Revenue Service.

A top REIT executive also endorsed the final rule’s release, saying “transparency is good.”

“I’ve been publicly supportive of this,” said Rick Matros, president and CEO of Sabra Health Care REIT in an email to McKnight’s. “There are groups that have opaque ownership structures so you don’t know who owns what. REITs have never taken steps to disguise/hide ownership.”

The rule’s finalization comes months after many of its ownership transparency measures were initially outlined in a February proposal.

Feds targeting REITs

Nursing homes will have to disclose the involvement of both private equity and real estate investment trust owners upon initial enrollment and revalidation and during any change of ownership.

CMS claimed that the new rule is the result of increasing concern over the quality of care in nursing homes owned by REITs and private equity, according to a fact sheet published early Wednesday.

CMS cited academic research that “suggests that ownership of nursing facilities by private equity companies and other types of investment firms can be associated with worse resident outcomes, and merits closer scrutiny.”

Ownership involvement that will now be tracked by CMS includes any party that exercises financial control over a skilled nursing facility; leases or subleases property to the SNF; has 5% or more stake in the value of SNF property; or provides a SNF administrative services, clinical consulting services, accounting or financial services, policies or procedures for any of the SNF’s operations, or cash management services.

The Biden administration has been putting increasing pressure on private owners of nursing homes through a variety of tools, most of them involving new ways for the public to understand who runs nursing homes and how they do it. This latest rule is expected to increase transparency into related party transactions, in which facilities own affiliated companies that they pay for services such as rent and administrative services.

Under the new rule, providers will be required to submit ownership either on a Medicare enrollment application or through means developed by individual states, in the case of Medicaid-only nursing homes.

US Senator Bob Casey (D-PA), chairman of the Senate Special Committee on Aging, said he supports the rule.

“For far too long, private equity firms have largely been able to avoid scrutiny into their ownership of nursing home facilities, which is associated with raising costs on residents while delivering worse care,” Casey argued. “This final rule from the Biden administration will allow us to look under the hood of these facilities, giving us the tools we need to better protect nursing home residents and hold negligent or profiteering facility owners accountable.”

CMS said it will provide information later as to how it will publicly post the collected data. The agency said it also will issue sub-regulatory guidance to explain the new requirements to stakeholders, including examples of the types of data that must be disclosed.