CMS Proposes Rule Requiring More Nursing Home Ownership Transparency, Including REIT and Private Equity Disclosures

The Centers for Medicare & Medicaid Services (CMS) announced Monday a proposed rule to require nursing homes to disclose more information regarding their ownership and management, including information related to assets held by real estate investment trusts (REITs) and private equity firms.

Nursing homes will be expected to disclose this information as part of the Medicare and Medicaid enrollment process,enabling government agencies and the public to more easily determine whether nursing home owners are private equity investors or real estate investment trusts.

In addition to these disclosures, CMS shared that the proposed rule would provide definitions of “private equity company” and “real estate investment trust” to assist nursing homes when reporting this data.


The move garnered mixed reactions from industry professionals. They generally applauded the effort to increase transparency, but some also expressed concerns about the approach being taken. American Health Care Association/National Center for Assisted Living (AHCA/NCAL) CEO Mark Parkinson said that the focus on REIT and private equity ownership is a “red herring.”

This proposed rule is just the latest step that CMS has taken to increase transparency of nursing home ownership, which was identified as a key priority of the comprehensive slate of reforms floated about one year ago by the Biden Administration.

In the wake of the Biden proposals last year, nursing home industry leaders pushed back against the way various types of ownership groups were being described and classified.


For example, private equity firms, private capital firms and REITs were being referred to all but interchangeably, even though they are distinct types of companies with very different structures and ability to influence operations, Rick Matros, CEO of Sabra Health Care REIT (Nasdaq: SBRA), said at the SNN RETHINK conference last year.

Defining REITs, private equity

However, Matros is in support of greater ownership transparency and is glad to see that CMS intends to define private equity and REITs as part of this latest move.

“It’s about accuracy,” he told SNN in an email. “Hopefully their work will lead them to distinguishing between private equity and private capital.”

The definitions of private equity and REITs contained in the proposed rule are broad. For instance, this is the language regarding private equity:

“A private equity company would be defined as a publicly traded or non-publicly traded company that collects capital investments from individuals or entities (that is, investors) and purchases an ownership share of a provider (for example, SNF, home health agency, etc.).”

CMS is soliciting feedback on these definitions and in particular requested input on whether publicly-traded private equity companies should be included in the definition.

“These key definitions will lead to the disclosure of whether direct and indirect nursing home owners are private equity companies or real estate investment trusts via an updated nursing home enrollment application expected to be ready for public use in the summer of 2023,” CMS said in a press release, citing research that private equity investment has been associated with decline in quality of care as well as an increase in Medicare costs.

“By making facility ownership and oversight more transparent, nursing home residents and their families will be more empowered to make informed decisions about care,” CMS said of the new proposal.

The proposed rule would require nursing homes enrolled in Medicare or Medicaid to disclose additional information regarding owners, operators, and management. This could help shed light on how “related parties” benefit from shared ownership interests in a nursing home or chain of nursing homes.

If the proposal is cleared, nursing homes would be required to share information such as that on providers of administrative services or clinical consulting services to their nursing homes in addition to names of lessors, who may be working under a different corporate name, CMS noted.

‘Distraction from the real issues’

Mark Parkinson, President and CEO of The American Health Care Association and National Center for Assisted (AHCA/NCAL) also applauded the move for transparency but targeting ownership and private equity is misleading, he said in an emailed statement to SNN.

“We support transparency and appreciate the Administration’s efforts to assist families in making more informed decisions. However, focusing on ownership and private equity is a red herring. Less than 5% of nursing homes are owned by private equity firms and roughly 12% are owned by a REIT, an entity that typically has no influence on daily operations,” Parksinson said. “This has become a distraction from the real issues that impact the majority of providers, like Medicaid underfunding and workforce shortages. If we truly want to improve America’s nursing homes, we need policymakers to prioritize investing in our caregivers and this chronically underfunded health care sector. Together, we should focus on meaningful solutions that can strengthen delivering the quality of care and services that our nation’s seniors deserve.”

The exact percentage of nursing homes owned by private equity firms is a subject of debate. The CMS proposed rule issued Monday stated that about 70% of nursing homes were for-profit facilities with about 11% owned by private equity in 2021, although the agency noted that “estimates vary.”

LeadingAge, which represents 5,000 nonprofit aging services providers, cheered on the proposal, with CEO and President Katie Smith Sloan calling it a step toward ensuring that “owners or associated businesses” do not put profits over care quality.

She also emphasized the rules and frameworks that nonprofit organizations in the sector already must adhere to.

“Nonprofit providers have always disclosed ownership information as required by federal tax law on Form 990s that are open to public inspection,” Smith Sloan said. “The corporate structures of LeadingAge members promote longevity of ownership through governance by community boards of directors, and are financially sustained through public bond offerings and donations from philanthropists and foundations—though government support is often needed to cover the rising costs of caring for older adults.”

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