With its decision, the Centers for Medicare and Medicaid Services, an agency under Health and Human Services, has restored a fundamental right of millions of elderly Americans across the country: their day in court.

It is the most significant overhaul of the agency’s rules governing federal funding of long-term care facilities in more than two decades.

And the new rule is the latest effort by the Obama administration to rein in arbitration’s parallel system of justice that was quietly built over more than a decade.

In May, the Consumer Financial Protection Bureau, the nation’s consumer watchdog, unveiled the draft of a rule that would prevent credit card companies and other financial firms from using arbitration clauses that bar consumers from banding together in a class-action lawsuit.

While Democrats, including Mr. Leahy, have tried to get rid of arbitration through legislation, their efforts have met resistance from various industry groups. The efforts by the consumer agency and now Health and Human Services do not require congressional approval.

Like other rules put forth by the administration, the rule on nursing homes that receive federal funding could be challenged in court. But absent those challenges, the rule is scheduled to go into effect by November. Only future admissions would fall under the new rule.

The nursing home industry has said that arbitration offers a less costly alternative to court. Allowing more lawsuits, the industry has said, could drive up costs and force some homes to close.