CMS finalizes rule requiring greater transparency for nursing home ownership

The Centers for Medicare & Medicaid Services (CMS) has finalized a rule that will require more transparency into nursing home ownership.

Under the rule, nursing facilities that are enrolled in Medicare and Medicaid, which encompasses most, must disclose additional details about their owners, operators and management. CMS said in a press release that the final rule aims to more clearly define private equity and real estate investment trusts to make these disclosures simpler.

The rule is the Biden administration's latest move to address quality of care in nursing homes. Alongside the rule, the Department of Health and Human Services' (HHS') Office of the Assistant Secretary for Planning and Evaluation issued a study that examines quality in facilities owned by private equity.

The analysis found that about 5% of facilities are owned by private equity firms, and private equity ownership drives a 12% decline in resident nurse hours per day as well as a 14% increase in the deficiency score index, indicating worsening performance, compared to other for-profit owners.

Earlier this year, CMS also proposed a rule around nursing home staffing requirements that drew significant ire from the industry.

“HHS continues to take action to improve the safety, quality, and accountability of nursing homes,” said HHS Secretary Xavier Becerra in the press release. “The Biden-Harris Administration believes that residents living in nursing homes should receive the dignity, care, and respect they deserve. Taking steps to help consumers to learn more about the owners of a nursing home will allow them to make the choice that best meets their needs.”

Nursing home sales have increased significantly over the past decade, and, since 2016, these sales have outpaced hospital sales, CMS said.

In addition to disclosures around ownership and other operational partners, nursing homes will be required to share further details around entities that either lease or sublease property. The facilities and the property owners may be set up as different firms even though they "work hand-in-hand," CMS said in the release.

"Nursing homes frequently use other companies to provide major services or supports within a facility, 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," CMS said.