CMS Proposed Rule Would Require Disclosure of Additional Ownership and Management Information for Nursing Homes

The Department of Health and Human Services (HHS) announced additional action to increase the transparency of nursing home ownership and management. The department issued a proposed rule to require nursing homes to disclose additional ownership and management information to the Centers for Medicare & Medicaid Services (CMS) and states.

The proposed rule would implement portions of Section 6101(a) of the Affordable Care Act. This would require nursing homes enrolled in Medicare or Medicaid, the majority of this country’s nursing homes, to disclose additional information regarding owners, operators, and management; for example, nursing homes would disclose individuals or entities that provide administrative services or clinical consulting services.

The management data nursing homes would be required to report on includes, “each person or entity who is an officer, director, member, partner, trustee, or managing employee of the facility, including the name, title, and period of service of each such person or entity.” CMS goes on to define “managing employee” as an “individual (including general manager, business manager, administrator, directors, or consultant) who directly or indirectly manages, advises, or supervises any element of the practices, finances, or operations of the facility.” The Society intends to ask CMS for clarification on its definitions and if “directors” include medical directors of the facilities.

Nursing homes frequently use other companies to provide major services or support, 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. The proposed rule would also require additional information about entities that lease or sublease property to nursing homes, since the facilities and property owners may be set up as different corporate entities even though the entities work hand-in-hand.

In addition to the Section 6101(a) disclosures, the proposed rule would provide definitions of “private equity company” and “real estate investment trust” to assist nursing homes when reporting this data. 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. Concerns about the quality of care and operations of nursing facilities owned by private equity companies and other types of investment firms have increased since 2011. Recent research has found that resident outcomes are significantly worse at private equity-owned nursing homes:

• A recent study found that residents in nursing homes acquired by private equity were 11.1% more likely to have a preventable emergency department visit and 8.7% more likely to experience a preventable hospitalization, when compared to residents of for-profit nursing homes not associated with private equity.
• One working paper examining 18,000 nursing home facilities over a 17-year period found that private equity ownership increased excess mortality for residents by 10%, increased prescription of antipsychotic drugs for residents by 50%, decreased hours of frontline nursing staffing by 3%, and increased taxpayer spending per resident by 11%. The study implies an additional 20,150 lives lost as a result of private equity ownership. Another study found that private equity-backed nursing homes had a COVID-19 infection rate and death rate that were 30% and 40% above statewide averages, respectively.

Research also suggests that private equity ownership of nursing homes may also lead to an uptick in Medicare costs.

The additional data required to be reported under the rule would be publicly reported pursuant to Section 6101(b) of the Affordable Care Act. This transparency will, among other things, allow families to make more informed choices about the care of their loved ones, and it will enable 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.

Comments are due April 14, 2023. The Society is reviewing the proposed rule further and preparing comments.

For a fact sheet on the proposed nursing home ownership disclosure rule, visit this website.

The proposed rule can be downloaded from the Federal Register.