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CMS to Require Greater Transparency on Nursing Home Ownership

Elder Law

The Centers for Medicare & Medicaid Services (CMS) published a final rule focused on requiring nursing homes that accept Medicaid and Medicare payments to disclose more information regarding their ownership.

Profit vs. Patient Care?

Research shows that when private equity firms and other investment firms manage nursing homes, patients in these facilities receive a substandard level of care at a higher cost. Patient experiences include elevated rates of death, more pain, fewer staff, and a greater likelihood of being administered antipsychotic drugs.

Increasing transparency, the CMS states, will assist residents of these facilities and their families in selecting quality nursing homes. Heightened reporting also will enable the CMS and others “to scrutinize more closely how ownership types correlate with care outcomes and to determine which environments are more likely to deliver better care for residents and patients.”

Private equity acquisitions of nursing homes have risen steeply over the past two decades. Today, the largest 10 nursing home chains currently own more than 10 percent of nursing homes nationwide. Advocates have long expressed concern about profit taking priority over patient welfare.

In a recent report, the Government Accountability Office estimated that private equity owners accounted for 5 percent of nursing homes. However, it also pointed out that many nursing homes had previously not disclosed to the CMS complete information about their ownership.

Requirements Under the New Provisions

Highlights of the final rule include the following:

  • Medicaid nursing homes and Medicare skilled nursing facilities will have to provide extensive details on:
  • o the facility’s governing body
    o individuals who serve as directors, members, partners, trustees, and managing employees of the facility
    o organizational structures

  • The CMS will require these nursing homes to report this information, including any changes in ownership, when enrolling in or renewing Medicare or Medicaid. Medicare skilled nursing facilities will also have to report when any other changes to this information occur.
  • Medicare skilled nursing facilities will have to re-enroll in Medicare at least every five years.
  • Updated definitions for the terms “private equity company” and other terms.

The final rule also includes an extensive section featuring the CMS’ responses to comments it received regarding earlier proposed versions of the rule. These provisions, which organizations such as nonprofit network LeadingAge have endorsed, are set to go into effect January 16, 2024.

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