Nursing homes will be required to disclose their owners and other affiliated businesses to federal authorities under a final rule the Centers for Medicare and Medicaid Services published Wednesday.
The regulation seeks to shed light on an often opaque industry. Many skilled nursing facilities have complex corporate structures that make it difficult for government agencies to hold owners, operators and other parties accountable for violations of laws governing such matters as safety and quality. CMS takes special aim at private equity and real estate investment trust involvement in the sector under the rule, which the agency proposed in February.
Nursing homes that accept Medicare or Medicaid must disclose their owners, trustees and companies that provide administrative, clinical and financial services. That includes REITs or other entities that own property on which nursing homes stand but do not own or operate the facilities themselves.
The regulation takes effect 60 days after it formally appears in the Federal Register, which is scheduled to occur Friday. Nursing homes must submit ownership disclosures within a year of then.
"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 their nursing home care," CMS Administrator Chiquita Brooks-LaSure said in a news release.
Private equity firms had ownership stakes in 5% of nursing home companies and REITs in 9% last year, according to a report the Health and Human Services Department published Monday.
In the final rule, CMS cited previous studies linking private equity ownership to poorer nursing home care. "Research has found that resident outcomes are significantly worse at private equity-owned nursing homes, and in the two to three years after real estate investment trusts invest in nursing homes, registered nurse staffing levels decline by as much as 6%," the regulation says.
The American Health Care Association/National Center for Assisted Living responded favorably to the rule. "We support transparency and appreciate the administration's efforts to assist families in making more informed decisions," the long-term care trade group said in a statement.