CMS Proposes New Nursing Facility Disclosure Requirements

The Centers for Medicare & Medicaid Services (CMS) recently issued a proposed rule that would require disclosure of private equity (PE) or real estate investment trusts (REITs) ownership, managerial, and other disclosable information for Medicare skilled nursing facilities (SNFs). The proposed rule also includes recommendations for comparable requirements for Medicaid nursing facilities (NFs) at the state level. If finalized, the proposed rule would likely increase the complexity of transactions involving PE or REIT ownership of SNFs and increase the reporting burden of PE or REITs with existing ownership interest in these facilities.

The timing of this proposed rule, according to CMS, is purposefully aligned with the Biden Administration’s recent initiative to improve the safety, quality, and accountability of nursing homes. The proposed rule also complements other recent CMS efforts intended to strengthen provider enrollment rules to “stop fraud before it happens” and stop playing “pay and chase” with individuals and organizations that the agency views as posing an undue risk of fraud, waste, or abuse to the Medicare and Medicaid programs. CMS stated that this proposed rule is necessary to obtain important data about the owners and operators of Medicare SNFs and Medicaid NFs, enabling CMS and states to better monitor the ownership and management of these providers. Given allegations of quality issues and differences in outcomes of these facilities with certain types of owners, CMS views this as an especially critical consideration.

If finalized, the proposed rule would require disclosure of the following information for all Medicare SNFs and Medicaid NFs:

• Each member of the governing body of the facility, 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.
• Each person or entity who is an additional disclosable party of 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.

Some of this data is already required to be disclosed, however the proposed rule expands definitions of certain terms that may require providers to report additional people or entities. Additionally, certain aspects of the proposed rule, if finalized, would only apply to Medicare SNFs and not to Medicaid NFs. Public comments on the proposed rule must be submitted by April 14, 2023.

For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters, and our attorneys can assist providers and suppliers in understanding new developments in healthcare law and regulation. If you or your healthcare entity has any questions pertaining to healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or wapc@wachler.com.