In November 2023, the Centers for Medicare & Medicaid Services (“CMS”) published a final rule requiring the disclosure of specific ownership information from Medicare skilled nursing facilities (“SNFs”) and Medicaid nursing facilities. The rule, effective January 16, 2024, implements portions of section 6101 of the Affordable Care Act, which requires CMS to collect information on “the disclosure of certain ownership, managerial, and other information regarding Medicare [SNFs] and Medicaid nursing facilities.”[1] These disclosure requirements are intended to improve the quality of care and accountability of nursing facilities owned by “particular categories of nursing facility owners (including, but not limited to private equity companies (PECs) and real estate investment trusts (REITs)),”[2] and are part of the Biden Administration’s efforts to increase transparency of the ownership structure of nursing homes.[3] According to CMS, it will use these disclosures to “better monitor and hold accountable” nursing facilities owned by PECs, REITs, or otherwise.
CMS’ final rule requires Medicare SNFs and other enrolled Medicaid nursing facilities to disclose the following upon initial enrollment and revalidation:
- Each member of the facility’s governing body, including the name, title, and period of service of each member.
- 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.
- Each person or entity who is an “additional disclosable party” of the facility, including any person that: (i) exercises operational, financial, or managerial control over the facility or a part thereof, provides policies or procedures for any of the operations of the facility, or provides financial or cash management services to the facility; (ii) 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 (iii) provides management or administrative services, management or clinical consulting services, or accounting or financial services to the facility.
- The organizational structure of each additional disclosable party of the facility and a description of the relationship of each such additional disclosable party to the facility and to one another.
These disclosure requirements will apply to all institutional providers during both initial enrollment and upon revalidations which, for SNFs, must occur every five (5) years. 42 CFR 424.515. Medicare SNF providers must make these disclosures as part of their Form CMS-855A initial enrollment or revalidation application in paragraphs (g)(1)(i)-(iv). SNFs must also report any change to the disclosures supplied within 30 days for change of ownership and 90 days for all other changes. 42 CFR 424.516(e).
CMS has also added data elements to Form CMS-855A that requires providers to identify whether an entity is a PEC or REIT. In promulgating this rule, definitions have been incorporated for PECs and REITs which is meant to aid CMS in identifying whether a SNF is owned by one of these entities. The final rule defines a “private equity company” (PEC) as “a publicly traded or non-publicly traded company that collects capital investments from individuals or entities and purchases a direct or indirect ownership share of a provider.” Moreover, the rule defines a “real estate investment trust” (REIT) as a corporation, trust or association which: (i) is managed by one or more trustees or directors; (ii) has beneficial ownership—evidenced by transferable shares, certificates or interest—held by 100 or more persons; (iii) would otherwise be taxable; (iv) is not a financial institution or insurance company; and (v) otherwise meets the requirements of 26 U.S.C. 856(c).
As for Medicaid, nursing facilities will be required to make the above disclosures when applicable state Medicaid agencies have installed the proper mechanism for reporting.
The disclosure information required to be reported to CMS will be made public by November 17, 2024. It is unclear at this juncture how the information will be made viewable to the public, however, CMS plans to provide guidance “outlin[ing] the timing, content, and means of the data publication, as well as other related information” prior to November 17, 2024.[4]
Failure to make these newly required disclosures upon enrollment or revalidation may result in denial of enrollment (or disenrollment) from Medicare, resulting in re-application bars of up to three (3) years—ten (10) years in the event of a revoked enrollment—as well as additional fines and/or imprisonment.
Frier Levitt attorneys routinely counsel healthcare and life sciences clients on compliance related issues, such as those created by the new rule requiring additional disclosures from nursing home facilities and related providers. Current nursing home facilities should begin planning now for revalidations, both on and off-cycle. Contact us to speak with an attorney to discuss how Frier Levitt can assist healthcare entities in complying with the newly required disclosures, as well as other compliance related issues your healthcare business may be facing.
[1] 88 Fed. Reg. 80141 at 80142-43 (Nov. 17, 2023)
[2] Id.
[3] https://aspe.hhs.gov/sites/default/files/documents/fd593ae970848e30aa5496c00ba43d5c/aspe-data-brief-ownership-snfs.pdf
[4] 88 Fed. Reg. 80141 at 80150 (Nov. 17, 2023).
