CMS creates new stronger rules on disclosure of ownership of skilled nursing facilities and nursing homes

The Center for Medicare and Medicaid has issued new rules requiring the disclosure of ownership of nursing homes and skilled nursing facilIties, including ownership by private equity firms. 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.

On November 15, 2023, the Centers for Medicare & Medicaid Services (CMS) placed on display at the Federal Register a final rule that will implement portions of section 6101 of the Affordable Care Act, requiring the disclosure of certain ownership, managerial, and other information regarding Medicare skilled nursing facilities (SNFs) and Medicaid nursing facilities, commonly known as nursing homes. It also defines the terms private equity company and real estate investment trust, about which information must be disclosed on Form CMS-855A, the Medicare enrollment application. This final rule continues a series of initiatives the Biden-Harris Administration announced in February 2022[1], designed to improve care and accountability at such facilities.


Section 6101(a) of the Affordable Care Act, signed into law on March 23, 2010, added a new section 1124(c) to the Social Security Act (the Act), establishing requirements for the disclosure of information about nursing home ownership and oversight.

Over the years, CMS has become increasingly concerned about the quality of care at nursing homes, especially those owned by private equity companies and other types of investment firms. Academic research suggests that ownership of nursing facilities by private equity companies and other types of investment firms can be associated with worse resident outcomes, and merits closer scrutiny. CMS believes that greater transparency about nursing homeowners and operators can help hold these parties more accountable for the quality of care they furnish and give families and caretakers the information they need.

Supporting Research

One working paper examining 18,000 nursing home facilities over a 17-year period found that private equity ownership was associated with 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%. 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.

The additional data required to be reported under the rule will be publicly reported within one year 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.

These new data and analysis support President Joe Biden’s Executive Order on Promoting Competition, and advance the Biden-Harris Administration’s goal of improving transparency around nursing facility ownership and increasing competition in the industry overall. Greater transparency will help both the Administration and external parties better understand how the nursing home market is changing and whether the market is becoming more concentrated, which could potentially disrupt market competition and affect quality of care. 

  • Between 2016 and 2021, 348 hospitals experienced a change in ownership, but 3,000 nursing homes experienced a change in ownership. The number of nursing homes sold each year has increased since 2016.
  • The largest 10 nursing home chains own more than 10% of nursing homes — a disproportionate share that raises concerns about market concentration.
  • Nursing homes with lower Star quality ratings are sold more often than those with higher Star quality ratings, raising concerns about the relationship between ownership changes and quality.
  • Recently published research has found that in the 2-3 years after real estate investment trusts invest in nursing homes, registered nurse staffing levels decline by as much as 6%.

In addition to the Section 6101(a) disclosures, the rule also established definitions of private equity company and real estate investment trust for purposes of Medicare enrollment, setting the stage for Medicare SNFs to disclose whether each direct and indirect owning or managing entity is a private equity company or real estate investment trust.[2] 

Today’s final rule builds on the Department’s historic releases of data and unprecedented efforts to increase transparency. In April 2022, CMS released data publicly — for the first time ever — on mergers, acquisitions, consolidations, and changes of ownership from 2016-2022 for hospitals and nursing homes enrolled in Medicare. In September 2022, CMS released additional data publicly on the ownership of approximately 15,000 nursing homes certified as a Medicare Skilled Nursing Facility, regardless of any change in ownership, including providing more information about organizational owners of nursing homes. Moreover, in December 2022, CMS released ownership data publicly — for the first time ever — for all Medicare-certified hospitals and in April 2023 publicly released ownership information regarding Medicare-certified hospices and home health agencies.

Although nursing homes must currently report certain ownership and management data to CMS and the states as part of, respectively, the Medicare and Medicaid enrollment processes, some of the information under section 1124(c) of the Act has not previously had to be disclosed (e.g., persons who merely furnish cash management services to an SNF that is enrolling in Medicare). This additional data, as outlined in the final rule, will give CMS and the states a more complete background on the organizations and individuals that own, oversee, and facilitate the operations of nursing homes.

Final Provisions

Given both the statutory mandate in section 1124(c) of the Act and the need to address quality of care concerns in nursing homes through increased transparency, the final rule requires the following:

  • Medicare SNFs and Medicaid nursing facilities will need to disclose the data outlined in section 1124(c) upon initial enrollment and revalidation. Medicare SNFs will also have to: (1) report this information as part of any change of ownership pursuant to 42 CFR § 489.18; and (2) report any change to this data within the timeframes specified in 42 CFR § 424.516(e). These new section 1124(c) data elements include:
  • Trustees.
  • Additional Disclosable Parties (some new parties), such as people or entities that:
    • Exercise financial control over the SNF.
    • Lease or sublease real property to the SNF.
    • Own a whole or part interest equal to or exceeding 5% of the total value of such real property.
    • Provide to the SNF administrative services, clinical consulting services, accounting or financial services, policies or procedures for any of the SNF’s operations, or cash management services.
      • Organizational structures of additional disclosable parties, such as the additional disclosable party’s board members.

The final rule also defines a private equity and real estate investment trust. CMS previously revised the Form CMS-855A Medicare enrollment application such that all providers and suppliers (including SNFs) that complete the revised Form CMS-855A must disclose whether a particular owning or managing entity it reported is a private equity company or real estate investment trust.

For Medicare SNFs, the data will be reported via the Form CMS-855A Medicare enrollment application. For Medicaid nursing facilities, the data will be reported via means prescribed by the state. Providers and suppliers will be allowed to use the prior version of Form CMS-855A for 30 days following the release of the revised form. CMS will announce when the revised form is released for public use. With the publication of our nursing home ownership disclosure final rule, the Form CMS- 855A will again be revised to collect the data required by section 1124(c).

CMS finalized several other proposed definitions to assist nursing homes in furnishing the requested data.  Also, since CMS and the states already collect some of the data in section 1124(c), CMS finalized its proposal that Medicare SNFs will not have to report this same information twice on the same Form CMS-855A Medicare enrollment application submission. CMS believes this approach will help alleviate the reporting burden on SNFs. States will have the discretion to adopt a similar policy.