Next Stop, Revalidation Station: CMS Final Rule for Nursing Home Transparency to Prompt Off-Cycle Revalidation, Revised Form CMS-855A, and Sub-regulatory Guidance

Nursing facilities should prepare to provide the Centers for Medicare & Medicaid Services (CMS) with additional information about their ownership, their managing employees and the parties providing certain financial and management services to the facility, pursuant to CMS’s Final Rule for Disclosures of Ownership and Additional Disclosable Parties Information for Skilled Nursing Facilities and Nursing Facilities (the Rule). The Rule implements portions of section 6101 of the Patient Protection and Affordable Care Act, which added a section to the Social Security Act and becomes effective on January 16, 2024.

CMS has advised, however, that it still needs to update Form CMS-855A for skilled nursing facilities (SNFs), as defined in section 1819(a) of the Social Security Act, to provide the required ownership, financial and management information to establish and maintain Medicare billing privileges. Once the Form CMS-855A is revised, CMS plans to use its powers to conduct off-cycle revalidations of SNFs to collect the required data, even if a SNF is not planning a change in ownership. During an off-cycle revalidation, a SNF has to provide all the information within 60 days of notice from CMS. Even though CMS has promised to provide sub-regulatory guidance about the Rule, it has not advised whether such guidance will be available when the Form CMS-855A is updated and off-cycle revalidations begin.

The Rule amends 42 CFR section 424.516 by adding paragraph (g) to identify information a SNF is required to disclose upon initial enrollment, during a revalidation, within 30 days of a change of ownership under 42 CFR section 489.19, or within 90 days of a change in the required information. Thereby, a SNF must disclose:

(i) Each member of the governing body of the facility, including the name, title, and period of service for each such member

(ii) 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

(iii) Each person or entity who is an additional disclosable party of the facility

(iv) 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

At 42 CFR section 424.502, the Rule adds the definitions for “additional disclosable party” and “organizational structure” and amends the definition of “managing employee,” thereby expanding the information that will be disclosed on a Form CMS-855A:

• Additional disclosable party means, with respect to a [SNF], any person or entity who does any of the following:(1)(i) exercises operational, financial, or managerial control over the facility or a part thereof;(ii) provides policies or procedures for any of the operations of the facility; or(iii) provides financial or cash management services to the facility.(2)(i) Leases or subleases real property to the facility; or (ii) owns a whole or part interest equal to or exceeding 5 percent of the total value of such real property.(3) provides—(i) management or administrative services; (ii) management or clinical consulting services; or (iii) accounting or financial services to the facility.
• Managing employee means— (1) A general manager, business manager, administrator, director, or other individual that exercises operational or managerial control over, or who directly or indirectly conducts, the day-to-day operation of the provider or supplier, either under contract or through some other arrangement, whether or not the individual is a W-2 employee of the provider or supplier. For purposes of this definition, this includes, but is not limited to, a hospice or [SNF] administrator and a hospice or [SNF] medical director. (2) With respect to the additional requirements at § 424.516(g) for a [SNF], an individual, including a general manager, business manager, administrator, director, or consultant, who directly or indirectly manages, advises, or supervises any element of the practices, finances, or operations of the facility.

• Organizational structure means, with respect to a [SNF], in the case of any of the following:

1. A corporation. The officers, directors, and shareholders of the corporation who have an ownership interest in the corporation which is equal to or exceeds 5 percent.
2. 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.
3. A general partnership. The partners of the general partnership.
4. A limited partnership. The general partners and any limited partners of the limited partnership who have an ownership interest in the limited partnership which is equal to or exceeds 10 percent.
5. A trust. The trustees of the trust.
6. An individual. Contact information for the individual.

Regardless of a SNF’s organizational structure, it will have to provide information about the organizational structure of each additional disclosable party. The breadth of these definitions could mean a rather long list of information to provide to CMS about the people and parties performing many services. This information, as presented on a Form CMS-855A, will also specifically include whether a disclosed entity is a “private equity company” (PEC) or a “real estate investment trust” (REIT).

Under the amended 42 CFR section 424.502, a PEC means “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” and a REITis as defined in section 856 of the Internal Revenue Code. Prior to issuing the Rule, CMS identified a correlation between PECs and REITs and a lack of quality of care for nursing facility residents. Accordingly, the Rule’s required disclosures seek transparency about private ownership, even though the Rule is not limited to SNFs with PEC and REIT ownership structures.

The Rule also adds certain definitions and required disclosures for Medicaid nursing facilities, and CMS expects state agencies to establish data collection mechanisms and begin requiring data collection promptly.

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