Centers for Medicare & Medicaid Services (“CMS”) published a proposed rule on February 15, 2023 that would require Medicare-enrolled skilled nursing facilities (“SNFs”) and Medicaid-enrolled nursing facilities (“NFs”) to disclose additional ownership and management information to CMS and state Medicaid agencies.

The proposed rule would implement Section 1124(c) of the Social Security Act, which was created by the Affordable Care Act to require the disclosure of information about ownership and oversight of SNFs and NFs. CMS first published a proposed rule in 2011 to implement the provision; after receiving public comments, that rule was not finalized. Twelve years later, CMS is trying again, citing concerns about the standard of care that residents receive in these facilities, including those owned by private equity companies and real estate investment trusts (“REITs”).

What does CMS want to know about the facilities’ ownership and oversight?

Under the proposed rule, SNFs enrolled in Medicare would be required to disclose the following information to CMS, and NFs would be required to report the same to the applicable state Medicaid agency:

(1) Each member of the governing body of the facility, including the name, title, and period of service of each member.

(2) 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. The proposed definition of “managing employee” applicable to SNFs and NFs is 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.

(3) Each person or entity who is an additional disclosable party of the facility. The proposed definition of “additional disclosable party” is any person or entity who:

  • Exercises operational, financial, or managerial control over the facility or a part thereof, or provides policies or procedures for any of the operations of the facility, or provides financial or cash management services to the facility;
  • Leases or subleases real property to the facility, or owns a whole or part interest equal to or exceeding 5% of the total value of such real property; or
  • Provides management or administrative services, management or clinical consulting services, or accounting or financial services to the facility.

 (4) 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. The proposed definition of “organizational structure” is:

  • For a corporation: the officers, directors, and shareholders of the corporation who have an ownership interest of 5% or more in the corporation.
  • For a limited liability company: the members and managers of the LLC, including, as applicable, what percentage each member and manager has of the ownership interest in the LLC.
  • For a general partnership: the partners of the general partnership.
  • For a limited partnership: the general and any limited partners of the LP who have an ownership interest of 10% or more in the LP.
  • For a trust: the trustees of the trust
  • For an individual: contact information for the individual

Private Equity or REIT Ownership info specifically identified

The proposed rule would also add data elements to Form CMS-855A that would require owning and managing entities of SNFs to disclose whether they are a private equity company or REIT. State Medicaid agencies would have the option to also collect this information about NFs.

A “private equity company” would be broadly defined as a publicly traded or non-publicly traded company that collects capital investments from individuals or entities (i.e., investors) and purchases an ownership share of a provider.

CMS is specifically seeking comment on whether this proposed definition should include publicly-traded private equity companies.

An “REIT” would be defined as a publicly traded or non-publicly traded company that owns part or all of the buildings or real estate in or on which the provider operates.

CMS is also seeking comment on whether the agency should be collecting information from SNFs about any other types of private ownership.

If the rule is finalized, the revisions to Form CMS 855-A (in which Medicare-enrolled providers report ownership information) would be structured so that SNFs would not be required to provide the same information more than once on the same application submission. States would have the option of adopting a similar policy with respect to the required Medicaid NF data.

How often would the information need to be provided?

Facilities would have to report the information upon initially enrolling in Medicare or Medicaid and when revalidating their enrollment. Further, once enrolled, SNFs would be required to disclose any changes to this information within the current timeframes specified in 42 CFR § 424.526(e), i.e., within 30 days for changes in ownership or control and 90 days for all other changes. Additionally, the proposed rule indicates that CMS may require off-cycle revalidation to get a baseline of ownership information from all SNFs if the rule is finalized. States could potentially require off-cycle revalidation as well for NFs.

Public Posting of Data

The Affordable Care Act requires the Secretary of HHS to make the information reported under the applicable regulations available to the public. If this rule is finalized, CMS intends to make the ownership data described above available to the public, possibly on   

Comments on the proposed rule are due by April 14, 2023 and can be submitted by stakeholders online or by mail.

Reed Smith will continue to track developments related to this proposed rule, including its potential finalization later this year. Please reach out to the authors or other health care attorneys at Reed Smith if you have any questions about how this proposed rule might affect your organization or if your organization would like assistance in preparing comments on the proposed rule.