Nursing homes will have to disclose whether private equity firms or real estate investment trusts help operate their facilities under a proposed rule for Medicare and Medicaid Services released Monday.
President Joe Biden’s administration argues that promoting transparency in nursing home ownership will improve safety and quality. Research has linked private equity and REIT ownership to low staffing levels And subpar quality care,
“We are taking all avenues to shine a light on this industry. We will continue to do everything possible to ensure that all Americans receive the respect, care and dignity they deserve, Health and Human Services Secretary Xavier Becerra said in a news release. Biden unveiled a slate of Nursing Home Proposal during his State of the Union address in 2022. But only a few of them have succeeded.
families launched a public database In September skilled nursing facility ownership information that it receives from facilities that treat Medicare and Medicaid beneficiaries is already required to be disclosed to regulators. The proposed rule sets stricter reporting requirements: Nursing homes must disclose to outside investors their ownership stake in their facilities as well as any entities that provide administrative or clinical consulting services.
Long-term care industry groups offered mixed initial reactions to the CMS plan.
Katie Smith Sloan, President and CEO of LeadingEdge, said in a news release, “We agree with the administration that nursing home ownership and financing should be transparent to help ensure that owners or affiliated businesses are not protected at the expense of quality care. There is no profit.”
While the American Health Care Association and the National Center for Assisted Living support transparency, there are more pressing matters facing the industry, President and CEO Mark Parkinson said in a news release.
“The focus on ownership and private equity is a red herring,” Parkinson said. Less than 5% of nursing homes are owned by private equity firms and about 12% by REITs, he said, and they generally have no impact on daily operations. “It has become a distraction from the real issues that affect most providers, such as Medicaid underfunding and workforce shortages.”
More Cash-strapped nursing homes are selling their real estate assets to investment trusts, who then lease the spaces back to operators. Registered nurse staffing levels declined by 6.3% within three years of REIT investment, according to a study published in Health Affairs last month.
Nursing homes also often turn to private equity firms amid financial distress. Despite the increase in corporate investment, Nearly 400 nursing homes closed Between 2020 and last month, according to CMS data. Nursing and residential care facilities shed more than 210,000 jobs in that period, Bureau of Labor Statistics data show.
Researchers and policymakers warn that when private equity companies invest in nursing homes, the quality declines. A JAMA study published in November found that residents of nursing homes acquired by private equity firms were 11.1% more likely to have preventable emergency department visits and 8.7% more likely to have preventable hospitalizations.
CMS is accepting comments on the proposed rule, which is set to appear in the Federal Register through Wednesday, April 14.
Lauren Berryman contributed to this story.