CMS will finally require nursing home owners and operators to disclose details about related entities and ownership structures. For decades, the industry was allowed to siphon taxpayer funds to shell companies providing worthless services. The rule includes and defines both private equity and real estate investment trust owners. CMS Administrator Chiquita Brooks-LaSure said in a press release:
“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.”
CMS will track any entity that exercises financial control over the nursing home; 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 rule imposes many of the ownership transparency measures outlined in a February proposal. Nursing homes must disclose the involvement of owners upon initial enrollment and revalidation and during any change of ownership. In a fact sheet on the rule, CMS officials said the agency had become “increasingly concerned about the quality of care at nursing homes, especially those owned by private equity companies and other types of investment firms.”
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.” Private equity ownership is linked to “poorer staffing conditions and resulting decreases in quality of care.”