There has been increasing government interest in obtaining ownership information with respect to the class of commercial real estate comprising nursing facilities. Specifically, the government is focused on nursing home facilities owned by private equity firms and real estate investment trusts (REITs) because of a perceived difference in quality outcomes. Between 2015 and 2020, there were almost 190 private equity deals related to nursing facilities, compared with 116 between 2010 and 2014. The total value of the deals also grew from $1 billion between 2010 and 2014 to $5 billion between 2015 and 2019. The U.S. Government Accountability Office (GAO) estimated that 5 percent of nursing facilities had private equity ownership in 2022. Unfortunately, ownership of the operations as compared with ownership of the real estate often gets confused in much of the data and reports that government and academicians have published. Despite the muddled data, enforcement authorities, Congress, and the White House have taken aim at proprietary investment in nursing facilities.

Concerned about quality, the White House has directed the Centers for Medicare and Medicaid Services (CMS) to take steps to increase the transparency of ownership data by following up on authorities provided in Section §6101 of the Affordable Care Act (Section §1124(c) to the Social Security Act or 42 U.S. Code §1320a–3). As a result, on November 15, 2023, CMS issued a Final Rule 88 Fed. Reg. 80141 requiring additional ownership and control disclosures for nursing facilities. The rule will require the disclosure of certain ownership, managerial, and other information regarding Medicare skilled Nursing Facilities and Medicaid Nursing Facilities (collectively “Nursing Facilities”). The rule is an attempt to improve the transparency of nursing home ownership, safety, and quality of care and to promote competition. Unlike existing disclosure of ownership requirements in the provider enrollment and program integrity processes, this new rule has a specific impact on the commercial real estate industry because it requires certain disclosures regarding the direct and indirect ownership of the real estate on which the nursing facilities are operated.

Summary of the Final Rule

The rule requires Nursing Facilities to provide additional data upon initial enrollment, revalidation, and reactivation. The additional data includes:

  1. Each member of the facility’s governing body, including the name, title, and period of service of each member
  2. 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
  3. Each person or entity who is an additional disclosable party of the facility
  4. The organizational structure of each additional disclosable party of the facility
  5. Description of the relationship of each such additional disclosable party to the facility and to one another

Who is considered a “disclosable party” is where real estate owners are impacted. 42 U.S. Code § 1320a–3(c)(5)(A) defines an “additional disclosable party” as a person or entity that—

  1. Exercises operational, financial, or managerial control over the facility or a part thereof, or provides policies or procedures for any of the facility’s operations, or provides financial or cash management services to the facility
  2. Leases or subleases real property to the facility, or owns a whole or part interest equal to or exceeding 5 percent of the total value of such real property or
  3. Provides management or administrative services, management or clinical consulting services, or accounting or financial services to the facility

Under 88 Fed. Reg. 80141, real estate owners of Nursing Facilities will need to have on hand current organizational charts for their company and provide updates on changes that occur thereafter. This information will become publicly available within one year of it being reported.

42 U.S. Code § 1320a–3(c)(5)(D) defines “organizational structure” as meaning, in the case of

  • A corporation – The officers, directors, and shareholders of the corporation who have an ownership interest in the corporation that is equal to or exceeds 5 percent
  • A limited liability company – The members and managers of the limited liability company (including, as applicable, what percentage each member and manager has of the ownership interest in the limited liability company)
  • A general partnership – The partners of the general partnership
  • A limited partnership – The general partners and any limited partners of the limited partnership who have an ownership interest in the limited partnership that is equal to or exceeds 10 percent
  • A trust – The trustees of the trust
  • An individual – Contact information for the individual and
  • Any other person or entity – Such information as the secretary determines appropriate


The new disclosure rules will result in several issues for real estate owners.

  • For the first time, real estate owners will have to coordinate with tenant providers to ensure that any information provided is correct and complete.
    • Failure to disclosure information properly could result in serious consequences for the tenant and therefore have follow-on consequences for the landlord.
    • Real estate owners should be prepared to see tenants asking for terms/covenants in lease documents that require the landlord to provide all necessary information in order to appropriately comply with all required disclosures.
    • Landlords are going to need to evaluate their investment governance structures to determine whether there are any contractual confidentiality provisions that may get in the way of complying with the regulatory disclosure requirements.
  • CMS may look to directly (or indirectly) audit disclosures made by “additional disclosable parties.”
  • CMS and other regulatory and enforcement authorities will likely use the additional disclosure information to study performance and other indicators relating to multi-facility landlords. Additionally, these same agencies may more closely scrutinize operators with connections to the same landlords.
  • Increased auditing and monitoring of how certain types of ownership affects care and nursing home performance may become more prevalent. As a result, the number of entities willing to invest in such properties and become the subject of the increased disclosures, transparency, and potentially increased audits may be significantly reduced.

All Nursing Facilities will have to deal with the increased regulatory and paperwork burden, something that they are all too familiar with. The obligation of compliance and penalties associated with non-compliance with the rule fall on the operators of the Nursing Facilities. However, the increase in disclosures that include real estate owners is a new burden that may disproportionately affect real estate owners that are individuals or smaller organizations.

Next Steps

Navigating these new rules requires preparation. Real estate owners will need to prepare a current and standard informational document or package that contains the required information and be in a position to provide it to their tenants as necessary. This disclosure information may be a larger project for REITs and large real estate owners, so advance planning is important.