Summary

The Centers for Medicare & Medicaid Services (CMS) released a proposed rule (Proposed Rule) intended to require additional disclosures related to the ownership and management of nursing facilities that accept federal reimbursement. Comments to the proposed rule are due April 14, 2023.

The Upshot

• The Proposed Rule would require Medicare skilled nursing facilities and Medicaid nursing facilities (Nursing Facilities) to disclose information related to members of facilities’ governing bodies; officers, directors, and other managers; and other “disclosable parties.”
• The Proposed Rule implements provisions of the Affordable Care Act that require disclosures related to nursing facility ownership and management.
• If finalized, the Proposed Rule would clarify obligations related to when Nursing Facilities must disclose relevant information and clarify reporting obligations related to entities, such as private equity firms and real estate investment trusts that directly or indirectly own or manage the Nursing Facilities.

The Bottom Line

Nursing Facilities must be prepared to disclose additional ownership and management information upon revalidation of Medicare (and Medicaid) enrollment and as otherwise required under Medicare and Medicaid regulations for changes in enrollment information.

On February 15, 2023, the Centers for Medicare & Medicaid Services (CMS) published a Proposed Rule intended to implement Affordable Care Act requirements related to disclosure of ownership and management information for Medicare skilled nursing facilities and Medicaid Nursing Facilities (collectively, Nursing Facilities). If finalized, the Proposed Rule would require Nursing Facilities to report to CMS (and/or applicable Medicaid agencies) information related to: members of a Nursing Facility’s governing body; each officer, director, member, partner, trustee, or managing employee of the Nursing Facility; all other “disclosable parties” and the organizational structure or other description of relationships related to disclosable parties. Nursing Facilities would be required to make such disclosures upon initial enrollment or revalidation with Medicare or Medicaid, or upon any relevant changes to such information as provided in Medicare and Medicaid regulations (likely within 90 days of relevant changes).

Under existing Affordable Care Act provisions, Nursing Facilities must disclose information related to ownership and leadership of the facility. Nursing Facilities must also report information for any “additional disclosable party,” which includes those entities exercising operational, financial, or managerial control over the facility, leasing property to the facility or providing management, clinical consulting, or administrative services to the facility. CMS did not finalize a previous proposal to implement these Affordable Care Act provisions.

With the Proposed Rule, CMS intends to amend relevant Medicare (and Medicaid) regulations to adopt the above Affordable Care Act reporting requirements and the statutory definition of “additional disclosable party.” The Proposed Rule would further define “organizational structure” and provide additional data elements specific to private equity firms and REITs on the relevant reporting form. The regulations would now define “private equity companies” and REITs (the latter would explicitly include both publicly traded and non-publicly traded entities). CMS invited comment related to other private mechanisms potentially suitable for disclosure as part of Medicare (or Medicaid) enrollment processes.

Lastly, the above ownership and management information would be subject to publication. This data would likely be made available on the CMS website within approximately one year from adoption of a relevant final rule. Therefore, private entities that maintain ownership, control, or management interests in Nursing Facilities should be prepared to have Nursing Facilities disclosing relevant information to CMS, state Medicaid agencies and, ultimately, the public.

Comments to the Proposed Rule are due April 14, 2023. Attorneys in Ballard Spahr’s Health Care group are available to assist clients with understanding or responding to the Proposed Rule, as well as addressing federal regulatory requirements for Nursing Facilities. Notably, Pennsylvania recently finalized a similar transparency initiative, as explained by Ballard Spahr attorneys here.

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