Nursing homes would have to disclose whether private equity firms or real estate investment trusts own or help operate their facilities under a proposed rule that the Service Centers Medicare and Medicaid issued Monday.
The administration of President Joe Biden argues that promoting transparency in nursing home ownership will improve quality and safety. Research has linked private equity and REIT ownership with lower staffing levels and below-average quality of care.
“We are pursuing every avenue to demystify this industry. We will continue to do everything we can to ensure all Americans receive the dignity, care, and respect they deserve,” Health and Human Services Secretary Xavier Becerra said in a statement. a press release. Biden announced a series of nursing home proposals during his State of the Union speech in 2022, but few of them materialized.
HHS launched a public database of skilled nursing facility ownership information in September, drawn from facilities that treat Medicare and Medicaid beneficiaries who have been required to disclose to regulators. . Proposed rule introduces stricter reporting requirements: Nursing homes would have to disclose outside investors who have an ownership stake in their facilities as well as any entities providing services administrative or clinical advice.
Long-term care industry groups have had a mixed initial response to the CMS plan.
“We agree with the government that the ownership and financing of nursing homes should be transparent to help ensure that owners or affiliated businesses do not profit from the cost of quality care,” said Katie. Smith Sloan, President and CEO of LeadingAge said in a press release.
President and CEO Mark Parkinson said while the American Healthcare Association and the National Center for Life Support advocate transparency, there are more pressing issues facing the industry. .
“The focus on ownership and private equity is a red herring,” says Parkinson. Less than 5% of nursing homes are owned by private equity firms and about 12% are owned by REITs, he said, and they generally have no impact on day-to-day operations. “This has become a distraction from issues that really affect the majority of providers, such as lack of Medicaid funding and workforce shortages.”
Many cash-strapped nursing homes sold their real estate assets to investment trusts, which then leased space to operators. According to a study published in the journal Health Affairs last month, the level of registered nurses fell by as much as 6.3% within three years of the REIT investment.
Nursing homes also often turn to private equity firms amid financial hardship. According to CMS data, despite the company’s increase in investment, about 400 nursing homes closed between 2020 and last month. Bureau of Labor Statistics data shows nursing and residential care facilities cut more than 210,000 jobs over that period.
Researchers and policymakers have warned that quality declines as private equity firms invest in nursing homes. A JAMA study published in November found that residents of nursing homes acquired by private equity firms were 11.1% more likely to go to a preventable emergency department, and more likely to go to the emergency department. preventable hospitalizations were 8.7% higher.
CMS is accepting comments on the proposed rule, which is due to appear in the Federal Register on Wednesday, through April 14.
Lauren Berryman contributed to this story.
