The Take Back Our Hospitals Act of 2026 adds a new subsection to section 1862 of the Social Security Act that forbids Medicare payments to hospitals and skilled nursing facilities that are owned or controlled by specified types of investors: private equity funds, corporations owned or controlled by those funds, and real estate investment trusts (REITs). Facilities already owned by such firms on enactment are grandfathered for three years before the prohibition applies.
The bill also builds enforcement mechanics into the Medicare statute: facilities found in violation must receive notice and an opportunity for hearing under the procedures in section 1128(f), covered firms can be held jointly and severally liable for penalties or obligations the facility incurs, and the Secretary of HHS gets rulemaking discretion to define control and related terms. For compliance officers, payors, and health system counsel, the bill would create ownership-based ineligibility that could force reorganizations, sales, or closures for affected providers and shift enforcement and administrative burdens to CMS.
At a Glance
What It Does
Adds subsection (p) to 42 U.S.C. 1395y that prohibits Medicare payments to hospitals and skilled nursing facilities owned or controlled by private equity funds, corporations they control, or REITs, with a three-year transition for existing ownership. It authorizes notice and hearings under section 1128(f) and makes covered firms jointly and severally liable for penalties or obligations of violating facilities.
Who It Affects
Hospitals and skilled nursing facilities with ownership or control ties to private equity funds, corporations controlled by such funds, or REITs; the private equity and REIT investors themselves; and the Centers for Medicare & Medicaid Services, which must identify and enforce ownership-based ineligibility.
Why It Matters
This is an ownership‑based condition of Medicare participation rather than a provider‑behavior rule; it directly targets investor structures and shifts legal exposure from facility entities to upstream owners, which could prompt restructurings, sales, or litigation and change how CMS enforces participation rules.
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What This Bill Actually Does
The bill inserts a new prohibition into Medicare’s statutory payment rules that turns ownership and control by certain investor types into a disqualifier for receiving Medicare payments. It covers two provider types—hospitals and skilled nursing facilities—and three categories of investors: private equity funds, corporations owned or controlled by those funds, and REITs.
Rather than imposing operational conditions (quality metrics, staffing ratios, etc.), the statute makes the investor relationship itself the trigger for ineligibility.
To avoid immediate disruption, the bill contains a three‑year grandfather for facilities already owned by covered firms on the date of enactment. That transition window gives affected parties time to reorganize or sell, but after that window expires the Medicare payment bar applies.
The bill ties procedural protections to existing Medicare enforcement practice by pointing to section 1128(f) for notice and hearing rights, which is the standard administrative process CMS uses for exclusions and civil money penalty adjudication.The legislation also reaches beyond the facility level with a strong liability hook: it makes covered firms jointly and severally liable for any penalty or obligation that derives from the facility’s violation of the payment prohibition. That shifts financial risk upstream and means investors—not just the operating entity—can be pursued for repayment or penalties under the statute.Because the statute depends on concepts like “control,” “affiliate,” and who qualifies as a “private equity fund,” it builds in several definitional rules.
An affiliate is any entity that controls, is controlled by, or is under common control with another; control includes owning or having the power to vote 10% or more of an entity’s voting securities, contracting to direct management (other than for goods or non‑management services), or other means the Secretary determines. The bill also borrows tax and securities law reference points—for example, it imports the REIT definition from the Internal Revenue Code and ties the private equity definition to the Investment Company Act’s exclusions—so CMS will need to apply cross‑domain standards to identify covered firms.Operationally, CMS would need to develop an ownership‑screening process, a record‑collection regime to establish affiliate relationships and control, and enforcement procedures that survive likely legal challenges.
For providers and investors, the statute creates three levers: sell or restructure ownership before the grandfather period ends; challenge CMS determinations through the administrative hearing process; or pursue organizational changes to keep investor ownership below the defined control thresholds (for example, under the 10% voting threshold).
The Five Things You Need to Know
The statute prohibits Medicare payments to any hospital or skilled nursing facility owned or controlled by a “covered firm” (private equity funds, corporations owned/controlled by them, or REITs).
Facilities owned by a covered firm on the date of enactment are exempt from the prohibition for three years, after which the ban takes effect.
The bill defines control to include owning, directly or indirectly, 10 percent or more of voting securities, and to include directing management via contracts except contracts solely for goods or non‑management services.
Covered firms and their affiliates are jointly and severally liable for any penalty or obligation the ineligible facility receives for violating the prohibition.
The bill directs that affected facilities receive notice and an opportunity for hearing consistent with the administrative procedures in section 1128(f), tying dispute resolution to existing Medicare adjudication processes.
Section-by-Section Breakdown
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Creates ownership‑based prohibition on Medicare payments
The bill adds subsection (p) which makes ownership or control by a covered firm a statutory bar to receiving Medicare payments for hospitals and skilled nursing facilities. This is a categorical ineligibility tied to investor type rather than to conduct or quality metrics, which changes the legal basis for exclusion from program payments and requires CMS to assess ownership as a participation condition.
Immediate rule and three‑year transition for existing ownership
Paragraph (1)(A) states the flat prohibition on payments; paragraph (1)(B) creates a three‑year window during which facilities already owned by covered firms continue to be eligible. That transition period is the statutory mechanism to avoid abrupt loss of Medicare revenue but also sets a firm deadline after which affected facilities must be out of covered‑firm control to remain eligible.
Uses section 1128(f) procedures for adjudication
The bill entitles any facility found in violation to notice and an opportunity for hearing 'as described in section 1128(f),' which imports CMS’s standard administrative processes for exclusions and civil money penalties. That choice channels disputes through existing Medicare administrative law pathways and preserves the option of later judicial review through the usual administrative-judicial sequence.
Makes upstream owners financially accountable
Paragraph (3) imposes joint and several liability on a covered firm (or affiliate) that owns or is an affiliate of a noncompliant facility for penalties or obligations the facility incurs. Practically, this allows the government to pursue recovery from investors rather than being limited to the facility entity, raising the stakes for private equity and REIT ownership structures.
Defines affiliate and operationalizes control (10% voting threshold)
The bill defines 'affiliate' as entities under common control and defines 'control' to include power over management, ownership of 10%+ voting securities, contracting to direct management (with an explicit carve‑out for contracts for goods or non‑management services), and other means the Secretary may specify. It also provides a broad definition of 'corporation' that captures common entity types including LLCs, limited partnerships, trusts, and associations that function like private corporations under state law.
Specifies which investor entities trigger the prohibition
A 'covered firm' is a private equity fund, a corporation owned or controlled by such a fund, or a REIT. A 'private equity fund' is tied to the Investment Company Act framework—essentially an investment company that would be regulated under that Act but for certain subsections and that acts, directly or through an affiliate, as a control person. The 'REIT' label references the tax code definition. Those cross‑references mean CMS must interpret securities and tax constructs to identify covered firms.
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Explore Healthcare in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Medicare program administrators and policymakers — by gaining a statutory tool to exclude facilities based on investor type, potentially simplifying enforcement strategies against ownership structures believed to prioritize investor returns over patient care.
- Competing non‑PE‑owned hospitals and SNFs — because removing Medicare payments from PE/REIT‑owned facilities could alter competitive dynamics in local markets where those investors currently operate.
- Advocacy groups and policymakers concerned about investor behavior in healthcare — who gain a clear statutory lever to deter certain ownership models without having to prove operational misconduct at the facility level.
Who Bears the Cost
- Hospitals and skilled nursing facilities owned or controlled by private equity funds, corporations owned by those funds, or REITs — which could lose Medicare revenue after the three‑year transition and may face forced sales, restructurings, or closures.
- Private equity funds, REITs, and corporate owners — which face direct financial exposure due to joint and several liability for facility penalties or obligations and may see their investments impaired.
- CMS and the Department of Health and Human Services — which bear administrative and enforcement burdens to identify covered firms, trace affiliate relationships, adjudicate hearings under section 1128(f), and defend against legal challenges.
- Medicare beneficiaries and local communities in areas dependent on an affected facility — who risk reduced access to care if facilities close, change payor mix, or are sold to entities that do not maintain current capacity.
Key Issues
The Core Tension
The central dilemma is whether to remove Medicare funds from facilities tied to investor models seen as extracting value (prioritizing investor returns) while accepting that doing so may destabilize provider capacity and patient access—enforcing ownership‑based ineligibility is a blunt policy tool that trades a straightforward standard for potentially large operational and legal consequences.
The statute raises immediate implementation questions. First, operationalizing 'control' across a complex web of private equity ownership, layered holding companies, and non‑voting economic interests will be technically demanding; the 10% voting threshold may capture passive investors in some structures while missing de facto control exercised by managers through contractual arrangements.
Second, tying the private equity definition to Investment Company Act concepts and the REIT definition to the Internal Revenue Code imports securities and tax law complexity into Medicare enforcement—CMS will need legal and financial expertise to apply those cross‑references consistently.
The joint and several liability provision increases enforcement potency but also invites litigation over statutory authority and the appropriate reach of Medicare recovery powers. Covered firms can be pursued for facility obligations, which could lead investors to restructure holdings, convert ownership forms, or offload assets before the three‑year window ends, potentially disrupting care.
Finally, the three‑year grandfather is a blunt instrument: it avoids immediate dislocation but creates a hard deadline that will accelerate transactions and restructurings, not all of which will preserve access or continuity of services. CMS must balance rigorous ownership screening with safeguards against unintended patient access harms and legal challenges.
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