CMS Finalizes Rules Requiring Nursing Homes to Disclose Ownership Arrangements

Last week, the Centers for Medicare and Medicaid Services (CMS) finalized a rule that would define private equity and real estate investment trusts as they relate to nursing home ownership, a step forward in the Biden administration’s plans to improve quality of care in nursing homes and scrutinize nursing home ownership arrangements.

Last year, President Joe Biden signed an executive order (EO) calling for consumer protections across industries in the spirit of healthy market competition. As part of that EO, the president called for increased transparency in nursing home ownership arrangements and avenues to hold nursing home owners accountable, specifically private equity arrangements that are associated with poorer quality of care. According to a CMS press release, the final rule will not only define essential terms but require nursing homes to disclose additional ownership and management information to CMS.

From CMS Administrator Chiquita Brooks-LaSure:

CMS is committed to leveraging our tools to improve safety and quality of care in nursing homes. By strengthening our ability to examine nursing home ownership, including private equity and real estate investment trusts, we can improve transparency for the people we serve and their loved ones, researchers, and regulators, and enable better informed decisions about nursing home care.

According to the Des Moines Register, the National Consumer Voice for Quality Long Term Care found earlier this year that many care facilities’ payments to affiliates exceed the cost of services provided. As part of the CMS rules, the organizational structures of each nursing facility’s “disclosable party” and the nature of those relationships must be reported to the agency. “Disclosable parties” include any individual who leases or subleases the facility, who own at least 5% of the real estate or individuals who provide management or administrative services.

Inside Health Policy adds that nursing facilities will be required to report the above information when enrolling in Medicare or Medicaid and when revalidating their enrollment in either program. The data will be made public within the following year, as required by the Affordable Care Act.