Rule2023-25408
Medicare and Medicaid Programs; Disclosures of Ownership and Additional Disclosable Parties Information for Skilled Nursing Facilities and Nursing Facilities; Medicare Providers' and Suppliers' Disclosure of Private Equity Companies and Real Estate Investment Trusts
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
November 17, 2023
Effective
January 16, 2024
Issuing agencies
Health and Human Services DepartmentCenters for Medicare & Medicaid Services
Abstract
This final rule will implement portions of section 6101 of the Patient Protection and Affordable Care Act (Affordable Care Act), which require the disclosure of certain ownership, managerial, and other information regarding Medicare skilled nursing facilities (SNFs) and Medicaid nursing facilities. It will also finalize definitions of private equity company and real estate investment trust for Medicare provider enrollment purposes.
Full Text
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<title>Federal Register, Volume 88 Issue 221 (Friday, November 17, 2023)</title>
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[Federal Register Volume 88, Number 221 (Friday, November 17, 2023)]
[Rules and Regulations]
[Pages 80141-80169]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-25408]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 424 and 455
[CMS-6084-F]
RIN 0938-AU90
Medicare and Medicaid Programs; Disclosures of Ownership and
Additional Disclosable Parties Information for Skilled Nursing
Facilities and Nursing Facilities; Medicare Providers' and Suppliers'
Disclosure of Private Equity Companies and Real Estate Investment
Trusts
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Final rule.
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SUMMARY: This final rule will implement portions of section 6101 of the
Patient Protection and Affordable Care Act (Affordable Care Act), which
require the disclosure of certain ownership, managerial, and other
information regarding Medicare skilled nursing facilities (SNFs) and
Medicaid nursing
[[Page 80142]]
facilities. It will also finalize definitions of private equity company
and real estate investment trust for Medicare provider enrollment
purposes.
DATES: These regulations are effective on January 16, 2024.
FOR FURTHER INFORMATION CONTACT: Frank Whelan, (410) 786-1302 or via
email at <a href="/cdn-cgi/l/email-protection#8fc9fdeee1e4a1d8e7eae3eee1cfece2fca1e7e7fca1e8e0f9"><span class="__cf_email__" data-cfemail="adebdfccc3c683fac5c8c1ccc3edcec0de83c5c5de83cac2db">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. Executive Summary and Background
A. Executive Summary
1. Background and Purpose
Section 6101(a) of the Affordable Care Act (Pub. L. 111-148) added
a new section 1124(c) to the Social Security Act (the Act). This
provision established requirements for the disclosure of information
about the owners and operators of Medicare SNFs and Medicaid nursing
facilities. (Except as otherwise indicated, these Medicare and Medicaid
providers will be collectively and occasionally referenced as ``nursing
facilities,'' ``nursing homes,'' or simply ``facilities'' or
``providers''.).
In a proposed rule published in the Federal Register on February
15, 2023 titled ``Medicare and Medicaid Programs; Disclosures of
Ownership and Additional Disclosable Parties Information for Skilled
Nursing Facilities and Nursing Facilities'' (88 FR 9820), we proposed
to implement portions of section 1124(c) of the Act. As we explained in
detail in the February 15, 2023 proposed rule, we are engaging in
rulemaking that is required under section 1124(c) of the Act.
Furthermore, we have recently received information regarding particular
categories of nursing facility owners (including, but not limited to,
private equity companies (PECs) and real estate investment trusts
(REITs)) that has generated concerns about the quality of care that
nursing facility residents receive. We stated that having sufficient
data on these owners could help CMS better monitor and hold accountable
their nursing facilities. We accordingly believed that implementing the
data collection requirements in section 1124(c) of the Act (albeit with
isolated exceptions) would assist us in achieving this aim.
We also proposed in the February 15, 2023 proposed rule to
establish definitions of PEC and REIT in 42 CFR 424.502. The purpose
was to assist SNFs in identifying on their Form CMS-855A enrollment
applications (Medicare Enrollment Application--Institutional Providers;
OMB Control No.: 0938-0685) which entities listed in Section 5 of said
application are PECs or REITs.\1\ In addition, in the Fiscal Year 2024
Inpatient Prospective Payment System Long-Term Care Hospital
Prospective Payment System proposed rule that appeared in the May 1,
2023 Federal Register (88 FR 26658) (hereinafter referred to as the FY
2024 IPPS/LTCH PPS proposed rule), we proposed to apply the
aforementioned PEC and REIT definitions to all providers and suppliers
that complete the Form CMS-855A, not merely SNFs.\2\
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\1\ We proposed on December 15, 2022 to revise the Form CMS-855A
application in a Paperwork Reduction Act submission (87 FR 76626) to
require all owning and managing entities listed on any provider's or
supplier's Form CMS-855A submission to disclose whether they are a
PEC or a REIT.
\2\ ``Medicare Program; Proposed Hospital Inpatient Prospective
Payment Systems for Acute Care Hospitals and the Long-Term Care
Hospital Prospective Payment System and Policy Changes and Fiscal
Year 2024 Rates; Quality Programs and Medicare Promoting
Interoperability Program Requirements for Eligible Hospitals and
Critical Access Hospitals; Rural Emergency Hospital and Physician-
Owned Hospital Requirements; and Provider and Supplier Disclosure of
Ownership.''
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2. Summary of the Major Finalized Provisions
There are three principal categories of provisions that we are
finalizing in this rule.
a. Data To Be Reported
We are finalizing our proposals that nursing homes must disclose
the following information to CMS or, for Medicaid nursing facilities,
the applicable state Medicaid agency (hereafter occasionally referenced
as ``state'' or ``state agency''):
<bullet> Each member of the facility's governing body, including
the name, title, and period of service of each member.
<bullet> 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.
<bullet> Each person or entity who is an additional disclosable
party of the facility.
<bullet> 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.
To the extent that a Medicare SNF must already report some of this
data via the Form CMS-855A, we are finalizing our proposal that the SNF
need not report the same data required under section 1124(c) of the Act
more than once on the same application submission. (States will have
the option of adopting a similar policy with respect to the required
Medicaid nursing facility data.) In general, this rule should be
construed towards disclosure and, if in doubt about whether additional
information should be released, SNFs should disclose it.
We will also make the information provided per section 1124(c) of
the Act publicly available within 1 year as required under section
6101(b) of the Affordable Care Act.
b. Timing of Reporting
We are finalizing our proposal that the nursing facility must
report the foregoing information upon initially enrolling in Medicare
or Medicaid (which, for purposes of this requirement, includes changes
of ownership under 42 CFR 489.18) and when revalidating their Medicare
or Medicaid enrollment. Moreover, a Medicare SNF, once enrolled, must
disclose any changes to this information within the current timeframes
specified in Sec. 424.516(e) for reporting changes in enrollment data.
Consistent with 42 CFR 424.515, SNFs must revalidate their Medicare
enrollment every 5 years. However, CMS under Sec. 424.515(d) can
perform off-cycle revalidations; that is, we can revalidate a provider
or supplier at any time and need not wait until the arrival of the
provider's or supplier's 5-year revalidation cycle. As finalized, CMS
will accordingly reserve the right and indeed plans to conduct off-
cycle revalidations of SNFs to collect the data required under section
1124(c) of the Act beginning when the revisions to the Form CMS-855A
are finalized. .
c. Definitions
To explain some of the terminology associated with these reporting
requirements, we proposed several new definitions. These included, but
were not limited to, private equity company, real estate investment
trust, additional disclosable party, and organizational structure.
Concerning the PEC and REIT definitions we proposed in the February
15, 2023 and FY 2024 IPPS/LTCH PPS proposed rules, we are finalizing
the PEC definition with one minor clarification, as discussed in
section III. of this final rule. Due to concerns raised by commenters,
we are not finalizing our proposed REIT definition. However, we are
finalizing a definition of REIT that commenters recommended that: (1)
we believe is more consistent with current federal law and industry
practice; and (2) will still enable us to collect the information we
need
[[Page 80143]]
regarding REIT ownership of nursing homes.
We are also finalizing without modification: (1) all other
definitions we proposed in the February 15, 2023 proposed rule; and (2)
our proposal in the FY 2024 IPPS/LTCH PPS proposed rule to apply the
PEC and REIT definitions (though as modified in this final rule) to all
providers and suppliers that complete the Form CMS-855A.
d. Effective Date
This final rule will become effective 60 days after the date it is
published in the Federal Register. Yet Medicare SNFs will not have to
disclose the data required under section 1124(c) of the Act until the
Form CMS-855A is: (1) revised to collect this data; and (2) publicly
available for use. For Medicaid nursing facilities, the required data
will not need to be reported until the applicable state Medicaid agency
has established means to collect it. CMS expects state Medicaid
agencies to promptly: (1) establish such data collection mechanisms;
and (2) begin requiring Medicaid nursing facilities to provide this
data once these collection means are established.
3. Summary of Costs and Benefits
Sections IV. and V. of this final rule outline the impacts that our
proposals will have on affected entities and beneficiaries. The
principal impact will involve the disclosure of the required data by
nursing facilities. As explained in section IV. of this final rule, we
project a total annual information collection burden on Medicare and
Medicaid nursing facilities in reporting this data of 26,974 hours at a
cost of $2,216,128.
We have determined that this final rule is not 3(f)(1) significant.
See section IV. of this final rule for a detailed discussion.
B. Legislative and Regulatory Authority
There are three principal categories of legal authorities for our
provisions:
<bullet> Section 1124(c) of the Act requires Medicare and Medicaid
nursing facilities to disclose certain information about their
ownership and management.
<bullet> Section 1866(j) of the Act furnishes specific authority
regarding the enrollment process for providers and suppliers.
<bullet> Sections 1102 and 1871 of the Act provide general
authority for the Secretary to prescribe regulations for the efficient
administration of the Medicare program.
C. Overview of Provider Enrollment
1. Medicare
Section 1866(j)(1)(A) of the Act requires the Secretary to
establish a process for the enrollment of providers and suppliers into
the Medicare program. The overarching purpose of the enrollment process
is to confirm that providers and suppliers seeking to bill Medicare for
services and items furnished to Medicare beneficiaries meet all
applicable Federal and State requirements to do so. The process is, to
an extent, a ``gatekeeper'' that prevents unqualified and potentially
fraudulent individuals and entities from entering and inappropriately
billing Medicare. Since 2006, we have undertaken rulemaking efforts to
outline our enrollment procedures. These regulations are generally
codified in 42 CFR part 424, subpart P (hereafter occasionally
referenced as simply ``subpart P''). They address, among other things,
requirements that providers and suppliers must meet to obtain and
maintain Medicare billing privileges.
As outlined in Sec. 424.510, one such requirement is that the
provider or supplier complete, sign, and submit to its assigned
Medicare Administrative Contractor (MAC) the appropriate enrollment
form, typically the Form CMS-855 (OMB Control No. 0938-0685). The Form
CMS-855 collects important information about the provider or supplier.
Such data includes, but is not limited to, general identifying
information (for example, legal business name), licensure and/or
certification data, and practice locations. The application is used for
a variety of provider enrollment transactions, including the following:
<bullet> Initial enrollment--The provider or supplier is--(1)
enrolling in Medicare for the first time; (2) enrolling in another
Medicare contractor's jurisdiction; or (3) seeking to enroll in
Medicare after having previously been enrolled.
<bullet> Change of ownership--The provider or supplier is reporting
a change in its ownership.
<bullet> Revalidation--The provider or supplier is revalidating its
Medicare enrollment information in accordance with Sec. 424.515.
<bullet> Reactivation--The provider or supplier is seeking to
reactivate its Medicare billing privileges after it was deactivated in
accordance with Sec. 424.540.
<bullet> Change of information--The provider or supplier is
reporting a change in its existing enrollment information in accordance
with Sec. 424.516.
After receiving the provider's or supplier's initial enrollment
application, CMS or the MAC reviews and confirms the information
thereon and determines whether the provider or supplier meets all
applicable Medicare requirements. We believe this screening process has
greatly assisted CMS in executing its responsibility to prevent
Medicare fraud, waste, and abuse.
As previously mentioned, over the years we have issued various
final rules pertaining to provider enrollment. These rules were
intended not only to clarify or strengthen certain components of the
enrollment process but also to enable us to take further action against
providers and suppliers: (1) engaging (or potentially engaging) in
fraudulent or abusive behavior; (2) presenting a risk of harm to
Medicare beneficiaries or the Medicare Trust Funds; or (3) that are
otherwise unqualified to furnish Medicare services or items.
2. Medicaid
States have considerable flexibility in how they administer their
Medicaid programs within a broad federal framework, and programs vary
from state to state. In operating Medicaid, states historically have
permitted the enrollment of providers who meet the state requirements
for program enrollment as well as any applicable federal requirements.
State enrollment requirements must be consistent with section
1902(a)(23) of the Act and implementing regulations at Sec. 431.51.
Part 455 of title 42 includes federal Medicaid provider enrollment
requirements to which states must adhere. These include, but are not
limited to, the following:
<bullet> Requiring providers to disclose information regarding
ownership, business transactions, certain criminal convictions, and
affiliations (Sec. Sec. 455.104 through 455.107).
<bullet> Screening providers consistent with the procedures in part
455, subpart E (Sec. 455.410).
<bullet> Revalidating a provider's enrollment at least every 5
years (Sec. 455.414).
<bullet> Performing site visits and criminal background checks in
certain circumstances (Sec. Sec. 455.432 and 455.434).
Although required to comply with the foregoing federal
requirements, states have the discretion to, for instance: (1)
undertake stricter screening of providers; and (2) require providers to
submit data beyond that identified in Sec. Sec. 455.104 through
455.107. Except as otherwise noted therein, the provisions in 42 CFR
part 455 are thus the minimum requirements for states, not the maximum.
[[Page 80144]]
D. Publication of the Proposed Rules
We received approximately 75 timely pieces of correspondence in
response to the February 15, 2023 proposed rule. We received
approximately 10 timely pieces of correspondence in response to our PEC
and REIT proposals in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR
27190). This final rule will summarize and respond to all of these
comments and address our finalized provisions stemming from both the
February 15, 2023 proposed rule and our PEC and REIT proposals from the
FY 2024 IPPS/LTCH PPS proposed rule.
II. Provisions of the February 15, 2023 and FY 2024 IPPS/LTCH PPS
Proposed Rules
A. February 15, 2023 Proposed Rule
1. Background
a. Statutory and Regulatory History
Section 6101(a) of the Affordable Care Act added a new section
1124(c) to the Act. It established requirements for the disclosure of
information about nursing facility ownership and oversight. Under
section 1124(c)(2)(A)(ii) of the Act, a nursing facility enrolling or
enrolled in Medicare or Medicaid must disclose--
<bullet> The name, title, and period of service of each member of
the facility's governing body;
<bullet> The name, title, and period of service of each person or
entity who is an officer, director, member, partner, trustee, or
managing employee of the facility; and
<bullet> Each person or entity who is an additional disclosable
party of the facility.
Section 1124(c)(5)(A) of the Act defines ``additional disclosable
party'' as a person or entity that--
<bullet> Exercises operational, financial, or managerial control
over the facility or a part thereof, or provides policies or procedures
for any of the facility's operations, or provides financial or cash
management services to the facility;
<bullet> 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
<bullet> Provides management or administrative services, management
or clinical consulting services, or accounting or financial services to
the facility.
In addition, section 1124(c)(2)(A)(iii) of the Act requires the
nursing facility to disclose: (1) the organizational structure of each
additional disclosable party of the facility; and (2) a description of
the relationship of each such additional disclosable party to the
facility and to one another. Section 1124(c)(5)(D) of the Act defines
``organizational structure'' as meaning, in the case of--
<bullet> 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;
<bullet> 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);
<bullet> A general partnership--The partners of the general
partnership;
<bullet> 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;
<bullet> A trust--The trustees of the trust;
<bullet> An individual--Contact information for the individual; and
<bullet> Any other person or entity, such information as the
Secretary determines appropriate.
2. Concerns About Nursing Facility Ownership
We initially included provisions to implement section 1124(c) of
the Act as part of the May 6, 2011 proposed rule titled ``Prospective
Payment System and Consolidated Billing for Skilled Nursing Facilities;
Disclosures of Ownership and Additional Disclosable Parties
Information'' (76 FR 26364). We did not finalize those proposed
disclosure provisions in the subsequent final rule, published on August
8, 2011,\3\ however, due to the need for more time to consider the
comments received, though we stated that we would address our
provisions in a separate final rule in early 2012. After reviewing the
comments, we did not publish a final rule or finalize our proposals.
Yet CMS's concerns about the quality of care and operations of nursing
facilities, including (though by no means exclusively) those owned by
private equity and other types of investment firms, have increased
since 2011 and we thus released a new proposed rule in February 2023.
We addressed these concerns in detail in the proposed rule and restate
them here.
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\3\ ``Prospective Payment System and Consolidated Billing for
Skilled Nursing Facilities for FY 2012; Final Rule'' (76 FR 48485).
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As of 2021, roughly 70 percent of nursing homes were for-profit
facilities; this includes those owned by PECs, which comprised
approximately 11 percent of all nursing homes (although estimates
vary).\4\ Reports have circulated that nursing facility quality has
declined under private equity and similar owners. For example, in
February 2021 the National Bureau of Economic Research (NBER) published
an analysis titled ``Does Private Equity Investment in Healthcare
Benefit Patients? Evidence from Nursing Homes.'' The report stated:
``Our estimates show that private equity (PE) ownership increases the
short-term mortality of Medicare patients by 10%, implying 20,150 lives
lost due to PE ownership over our twelve-year sample period. This is
accompanied by declines in other measures of patient well-being, such
as lower mobility, while taxpayer spending per patient episode
increases by 11%.'' \5\ A November 2021 analysis published in the
Journal of the American Medical Association contained similar findings
concerning PEC-owned nursing facilities. Titled ``Association of
Private Equity Investment in US Nursing Homes with the Quality and Cost
of Care for Long-Stay Residents,'' the report stated that PECs seek
annual returns of 20% or more; with this pressure to generate high
short-term profits, private-equity-owned nursing homes might reduce
staffing, services, supplies, or equipment, which could adversely
affect quality of care.\6\ The analysis concluded that: (1) private
equity acquisition of nursing facilities was associated with higher
costs and increases in emergency department visits and hospitalizations
for ambulatory sensitive conditions; and (2) per the study's findings,
more stringent oversight and reporting on private equity ownership of
nursing homes may be warranted.\7\ The previously mentioned concerns
about nursing home ownership are not limited to PECs. Other types of
private ownership, such as REITs, have generated similar concerns.\8\
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\4\ Medicare Payment Advisory Commission, ``Congressional
Request: Private Equity and Medicare,'' June 2021.
jun21_ch3_medpac_report_to_congress_sec.pdf.
\5\ Atul Gupta, Sabrina T. Howell, Constantine Yannelis, and
Abhinav Gupta, Does Private Equity Investment in Healthcare Benefit
Patients? Evidence from Nursing Homes, 2021, p. i.
\6\ Robert Tyler Braun, Hye-Young Jung, Lawrence Casalino, et
al., JAMA Health Forum, November 19, 2021.
\7\ Ibid.
\8\ Robert Tyler Braun et al., The Role Of Real Estate
Investment Trusts In Staffing US Nursing Homes, Health Affairs,
January 25, 2023, The Role Of Real Estate Investment Trusts In
Staffing US Nursing Homes [verbar] Health Affairs The Role Of Real
Estate Investment Trusts In Staffing US Nursing Homes [verbar]
Health Affairs.
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[[Page 80145]]
The Biden-Harris Administration's concerns about nursing facility
quality of care and private equity ownership led to its announcement on
February 28, 2022, of a series of initiatives designed to improve care
and accountability at such facilities. In its fact sheet titled
``Protecting Seniors by Improving Safety and Quality of Care in the
Nation's Nursing Homes,'' the White House stated that ``(f)or too long,
corporate owners and operators have not been held to account for poor
nursing home performance.'' \9\ The fact sheet also stated that CMS
would ``implement Affordable Care Act requirements regarding
transparency in corporate ownership of'' nursing facilities, including
the ``collect[ion] and public reporting [of] more robust corporate
ownership and operating data.'' \10\
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\9\ <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/02/28/fact-sheet-protecting-seniors-and-people-with-disabilities-by-improving-safety-and-quality-of-care-in-the-nations-nursing-homes/">https://www.whitehouse.gov/briefing-room/statements-releases/2022/02/28/fact-sheet-protecting-seniors-and-people-with-disabilities-by-improving-safety-and-quality-of-care-in-the-nations-nursing-homes/</a>.
\10\ Ibid.
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Government oversight bodies, too, have studied the issue of nursing
facility quality across the board, regardless of the precise type of
ownership involved. The Government Accountability Office (GAO)
published an analysis on January 14, 2022 titled ``Health Care Capsule:
Improving Nursing Home Quality and Information'' (GAO-22-105422). This
document summarized past GAO reports that expressed continued concern
about the level of care that SNF beneficiaries receive. Problems that
the GAO cited in this analysis and in prior studies included infection
prevention and control, ensuring that the nursing home environment is
free from accidents, and food safety.\11\ In a September 2020 report
titled ``National Background Check Program for Long-Term Care
Providers: Assessment of State Programs Concluded in 2019'' (OEI-07-20-
00180), the U.S. Department of Health and Human Services' Office of
Inspector General (OIG) noted that patient abuse, patient neglect, and
misappropriation of property have been identified as widespread
problems harming beneficiaries receiving long-term care. Of particular
significance was the OIG's statement that, per various studies, some
nurse aides who were convicted of abuse, neglect, or theft had previous
criminal convictions that could have been found through background
checks.\12\ The OIG added that such background checks can help protect
long-term care beneficiaries.\13\
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\11\ GAO-22-105422, p. 1.
\12\ OEI-07-20-00180, p. 1.
\13\ Ibid.
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All of the foregoing emphasizes the importance of CMS' efforts to:
(1) improve the quality of care provided in nursing facilities; and (2)
facilitate greater transparency regarding nursing facilities' owners
and operators, whether they be PECs, REITs, or otherwise. We believe
nursing homeowners and operators are in a position to address some of
the problems referenced in the aforementioned analyses and reports and
make operational improvements. Knowing who these parties are through
their disclosures on the Form CMS-855A and to states and the data
publication under section 6101(b) of the Affordable Care Act will: (1)
provide additional transparency that may assist CMS and other
regulators in holding nursing facilities accountable; and (2) create
increased competition between nursing homes to improve quality by
allowing consumers to select facilities with better knowledge of their
owners and operators.
3. Proposed Provisions
To this end, we proposed the following provisions in the February
15, 2023 proposed rule:
a. Medicare
(1) Update to Sec. 424.516
We proposed to add new paragraph (g)(1) to Sec. 424.516 outlining
the following information to be reported as part of a SNF's Form CMS-
855A initial enrollment or revalidation application (including off-
cycle revalidation applications). These data elements would be
designated as paragraphs (g)(1)(i) through (iv), respectively, and
would be in addition to (and not in lieu of) all other reporting
requirements in part 424 subpart P:
<bullet> Each member of the facility's governing body, including
the name, title, and period of service of each such member.
<bullet> 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.
<bullet> Each person or entity who is an additional disclosable
party of the facility.
<bullet> 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.
(We also proposed in the introductory paragraph of (g)(1) that
initial applications include, strictly for purposes of paragraph (g)'s
applicability, changes of ownership under 42 CFR 489.18. This means
that the SNF's new owner, like an initially enrolling SNF, would have
to disclose on its Form CMS-855A the data required per Sec.
424.516(g). This would help ensure that CMS has sufficient data on the
facility's new ownership and operators.)
The four data elements in paragraphs (g)(1)(i) through (iv) are
identical to those in section 1124(c)(2)(A)(ii) and (iii) of the Act.
Some of this information is already captured on the Form CMS-855A
application. To avoid duplicate reporting and thus ease the burden on
SNFs, we proposed in paragraph (g)(2) that the data in paragraphs
(g)(1)(i) through (iv) need not be disclosed more than once on the same
application submission. To illustrate, and consistent with sections
1124(a) and 1124A of the Act, an organizational provider or supplier
(including a SNF) must currently report in Section 5 of the Form CMS-
855A all entities with a partnership interest in the provider or
supplier and, in Section 6, all of the provider's or supplier's
managing employees. While proposed paragraph (g)(1)(ii) also would
require SNFs to disclose this data, the SNF would not have to report it
twice on the same Form CMS-855A submission: once per section 1124(a) of
the Act and again per section 1124(c) of the Act.
New paragraph (g)(3) would state that the SNF must report any
change to any of the information described in paragraphs (g)(1)(i)
through (iv) within the current timeframes in Sec. 424.516(e) for
reporting changes in enrollment data--specifically, 30 days for changes
in ownership or control and 90 days for all other changes. This is to
ensure that CMS has accurate and updated information on the SNF.
(2) Definitions
To clarify some of the terminology used in Sec. 424.516(g)(1), we
proposed to add several definitions to Sec. 424.502.
First, we proposed to define ``additional disclosable party''
consistent with the definition of the same term in section
1124(c)(5)(A) of the Act.
Second, Sec. 424.502 currently defines ``managing employee''
consistent with the definition of the same term in section 1126(b) of
the Act. Section 1124(c)(5)(C) of the Act, too, defines ``managing
employee,'' though only for purposes of nursing facilities under
section 1124(c) of the Act. This latter definition is slightly broader
and encompasses more individuals than section 1126(b) of the Act. Since
the two
[[Page 80146]]
definitions are not precisely the same, we cannot use the section
1126(b) of the Act definition for nursing facilities. Accordingly, we
proposed to add to the end of Sec. 424.502's definition of ``managing
employee'' a separate definition of ``managing employee'' that mirrors
section 1124(c)(5)(C) of the Act and applies only to SNFs and the
requirements in Sec. 424.516(g). It would mean 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.
Third, we proposed to define ``organizational structure'' as the
term is defined in section 1124(c)(5)(D) of the Act.
Fourth, we have added data elements to the Form CMS-855A via which
all providers and suppliers must identify whether an entity it has
disclosed on its application is a PEC or a REIT. To assist stakeholders
in understanding the meaning of these terms for provider enrollment
purposes, we proposed to add definitions thereof to Sec. 424.502. We
proposed to define a PEC as a publicly traded or non-publicly traded
company that collects capital investments from individuals or entities
(that is, investors) and purchases an ownership share of a provider
(for example, SNF, home health agency, etc.). We proposed to define a
REIT 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. We solicited comment on the propriety of our proposed
definitions and welcomed any suggested revisions thereto; we
particularly solicited comment on whether our proposed definition of
PEC should include publicly traded PECs. We also welcomed public
feedback regarding any other types of private ownership besides PECs
and REITs about which CMS should consider collecting information from
SNFs as part of the enrollment process.
b. Medicaid
We proposed to revise our Medicaid enrollment provisions in 42 CFR
part 455, subpart B, to include therein regulatory provisions akin to
those we proposed in part 424, subpart P.
In Sec. 455.101, we proposed to add the same definitions of
``additional disclosable party'' and ``organizational structure'' that
we proposed in Sec. 424.502, excluding the reference to skilled
nursing facility, a Medicare-only term; we would instead reference
nursing facilities as defined in section 1919(a) of the Act.
We also proposed to revise Sec. 455.101's definition of ``managing
employee'' in two ways. First, we would clarify in the definition's
opening sentence that an individual can qualify as a managing employee:
(1) even if he or she is acting under contract or through some other
arrangement; and (2) whether or not the individual is a W-2 employee of
the institution, organization, or agency. Second, and similar to our
proposed revision to the definition of ``managing employee'' in Sec.
424.502, we proposed to add to the end of the definition of this term
in Sec. 455.101 a separate definition of ``managing employee'' that
mirrors section 1124(c)(5)(C) of the Act and applies only to nursing
facilities. It would mean 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.
Current Sec. 455.104 identifies certain ownership and control
information that Medicaid providers must disclose to enroll or remain
enrolled in Medicaid. This information includes some of that referenced
in section 1124(c) of the Act, but Sec. 455.104 does not currently
incorporate all of the section 1124(c) of the Act data elements. To
address this, we proposed several changes to Sec. 455.104.
First, existing Sec. 455.104(e) states that federal financial
participation is not available in payments made to a disclosing entity
that fails to report required ownership or control information. We
proposed to redesignate this paragraph as Sec. 455.104(f) for
organizational purposes and to establish a new Sec. 455.104(e) that
would address our proposed additional disclosure provisions.
Second, and for nursing facilities as defined in section 1919(a) of
the Act, new Sec. 455.104(e)(1)(i) through (iv) would include the same
data elements described in proposed Sec. 424.516(g)(1) through (iv).
Paragraph (e)(1) would also specify that this information must be
furnished (a) upon initial enrollment and revalidation and (b) in
addition to (and not in lieu of) all other required data disclosures in
part 455, subpart B.
Third, we proposed in Sec. 455.104(e)(2) that the state need not
require the provider to report the data described in paragraph (e)(1)
more than once on the same enrollment application submission. This
provision is similar to that in proposed Sec. 424.516(g)(2) for
Medicare but with an important difference, in that Sec. 455.104(e)(2)
would be optional for states. That is, the state could, but would not
be required to, mandate the reporting of the Sec. 455.104(e)(1) data
more than once on the same application submission. Consistent with the
general deference we have long afforded states regarding the operation
of their Medicaid provider enrollment programs, we did not seek to
overly restrict the logistical means by which states collect the
information in question.
In a similar vein regarding state deference, we did not propose
that states require nursing homes to report changes to their existing
section 1124(c) information within certain timeframes. However, we did
encourage states to establish such reporting requirements, including
when the provider changes its ownership. Likewise, we suggested (but
did not propose to require) that states collect data signifying whether
a particular organization reported under section 1124(c) of the Act is
a PEC or REIT.
c. Additional Related Proposed Provisions
(1) Public Posting of Data
Section 6101(b) of the Affordable Care Act states that no later
than 1 year after final regulations promulgated under section
1124(c)(3)(A) of the Act are published in the Federal Register, the
Secretary shall make the information reported per such regulations
available to the public. Consistent with section 6101(b) of the
Affordable Care Act, we outlined in the proposed rule our intention to
make data reported per section 1124(c) of the Act publicly available
within 1 year after the final rule is published in the Federal
Register.
(2) Section 1124(c)(3)(A) of the Act
Section 1124(c)(3)(A) of the Act states, in part, that regulations
implementing the reporting requirements of section 1124(c) of the Act
must also require that the facility certifies (as a condition of
participation and payment under Medicare and Medicaid) that the
information the facility reports ``is, to the best of the facility's
knowledge, accurate and current.'' Under our current Medicare
regulations at Sec. 424.510(d)(3), an authorized official or delegated
official (as those terms are defined in Sec. 424.502) must sign the
Form CMS-855A on behalf of the provider. In signing the application,
the official attests to the following: ``By my signature, I certify
that the information contained herein is true, correct, and complete,
and I authorize the Medicare fee-for-service contractor to verify this
[[Page 80147]]
information. If I become aware that any information in this application
is not true, correct, or complete, I agree to notify the Medicare fee-
for-service contractor of this fact in accordance with the timeframes
established in 42 CFR 424.516(e).'' This ``true, correct, and
complete'' standard has been part of Medicare provider enrollment
applications for many years, and we believe its lack of associated
qualifying language (such as ``to the best of my knowledge'') is
beneficial for ensuring that the provider and its signatory fully
understand the need to submit accurate data.
We expressed concern in the proposed rule that implementation of
section 1124(c)(3)(A) of the Act would result in two knowledge
standards for the Form CMS-855A. Specifically, the required nursing
facility information would have a ``to the best of my knowledge''
standard, whereas all other data on the application (for instance,
practice locations, final adverse actions) would have an unqualified
``true, correct, and complete'' standard. This could cause confusion
within the nursing facility community. More importantly, though, it
might convey the impression that the provider need not be as careful
and thorough about confirming the correctness of the nursing facility
data in comparison to the rest of the application's information. This
is because the nursing facility data would appear to invoke a lesser
knowledge standard. We noted that these same issues could arise with
Medicaid enrollment, since some state Medicaid provider enrollment
applications may have knowledge standards different from that
identified in section 1124(c)(3)(A) of the Act. Due to the need to
further review the potential operational implications of section
1124(c)(3)(A) of the Act, we did not propose to implement this
provision but stated that we may pursue implementation via future
rulemaking. Regardless, providers should submit accurate information,
and we may take enforcement action if the information furnished is
inaccurate.
(3) Section 1124(c)(2)(B) of the Act
Section 1124(c)(2)(B) of the Act states that if a facility reports
the data described in section 1124(c)(2)(A) to another Federal agency,
the facility may provide the form on which the data was submitted (or
other such information submitted) to meet the disclosure requirements
of section 1124(c)(1) of the Act. Given the potential operational
complexities of incorporating the provisions of section 1124(c)(2)(B)
of the Act into Sec. 424.516(g) or 42 CFR part 455 when we already
have a vehicle (the Form CMS-855A) for collecting the data referenced
in section 1124(c) of the Act, we stated in the proposed rule that we
needed additional time to examine this matter but would consider
addressing section 1124(c)(2)(B) of the Act in future rulemaking.
B. FY 2024 IPPS/LTCH PPS Proposed Rule
In addition, in the FY IPPS/LTCH PPS proposed rule (88 FR 27190),
we proposed to apply the aforementioned PEC and REIT definitions to all
providers and suppliers that complete the Form CMS-855A, not merely
SNFs.\14\ We explained therein that the reason for this proposal was to
help us better understand the scope of PEC and REIT involvement in the
health care field as a whole. In our view, limiting the collection of
PEC and REIT data to SNFs would give us an incomplete picture of PEC
and REIT impact on patient care.
We explained in the FY 2024 IPPS/LTCH PPS final rule (88 FR 59309)
that we would address the comments we received on our proposal in the
present final rule.
III. Analysis of and Responses to Public Comments and Final Provisions
As noted in section I.D. of this final rule, we received
approximately 75 timely pieces of correspondence in response to the
February 15, 2023 proposed rule. We received approximately 10 timely
pieces of correspondence in response to our PEC and REIT proposals in
the aforementioned FY 2024 IPPS/LTCH PPS proposed rule. This section
summarizes and responds to all the public comments and addresses our
finalized provisions stemming from the February 15, 2023 proposed rule
and our PEC and REIT proposals from the FY 2024 IPPS/LTCH PPS proposed
rule.
Although the comments and responses regarding the February 15, 2023
proposed rule are categorized by specific subject matter, we note that
there is topical overlap between some of them; for instance, certain
comments can fall within multiple subcategories. Readers are therefore
encouraged to review all of the comments and responses following to
ensure that their specific areas of interest are addressed.
A. Comments and Responses--February 15, 2023 Proposed Rule
1. General Comments
Comment: Numerous commenters supported our proposal to implement
section 1124(c) of the Act and the reporting requirements therein. They
noted that nursing facilities are often owned by large corporations or
investment funds with complex ownership structures that can be
difficult to understand. Transparency in ownership, they stated, is
necessary to: (1) provide accountability and oversight of these
facilities; (2) identify potential risks and weaknesses in the
facility's operations, such as financial instability or inadequate
staffing; and (3) help ensure that nursing facilities are operated with
their patients' best interests in mind.
Response: We appreciate the commenters' support.
Comment: Several commenters believed the proposed rule lacked
evidence of a direct connection between disclosure of the proposed
information and nursing home quality of care. A commenter stated that
some states already have similar disclosure requirements, but this data
has neither predicted nor prevented instances of poor quality, which,
the commenter stated, are infrequent. Another commenter questioned
whether the significant effort they believed nursing homes will have to
make to comply with the rule's requirements will achieve CMS' goal of
providing the public with an understanding of nursing homes'
organizational relationships.
Response: We respectfully disagree with the commenters on several
grounds.
First, section 1124(a)(1) of the Act required us to undertake this
rulemaking consistent with section 6101 of the Affordable Care Act. We
proposed the February 15, 2023 proposed rule in part to help satisfy
this requirement.
Second, part of the challenge CMS faces in ensuring quality care at
nursing homes is our lack of sufficient knowledge of all the parties
associated with the nursing home's ownership, operations, and
management. Without a complete understanding of the full scope of the
facility's operations and its relationship with other persons and
entities, it can be challenging to pinpoint the origin within the
organization's overall structure of any quality-of-care problems, as
well as whether taxpayer funding is being appropriately spent on care.
This, in turn, can hinder CMS' ability to take remedial action as
warranted and applicable. While we currently collect some ownership and
management data per section 1124(a) of the Act, this data has proven
insufficient to furnish the complete picture we need to detect nursing
home care problems from an organizational standpoint.
[[Page 80148]]
Third, we agree that CMS in the proposed rule does not cite
evidence beyond all possible doubt of a correlation between the section
1124(c) data and improved care. This is because we have not collected
some of this data before. A principal motivation for this proposal is
to accumulate more information to better understand the relationship
between nursing facility ownership and management structures and
quality of care.
Fourth, while the commenter contends that some states already
collect similar data but that there is no proof it has positively
impacted patient care, CMS will be obtaining and publishing this
information on a national scale and not on a statewide basis. This will
better enable CMS and stakeholders to view ownership trends, especially
involving nationwide chains and organizations, to a truly robust degree
and to gauge the impact on patient care. In other words, we believe a
nationwide and uniform data collection could go further towards
favorably affecting nursing home services than the more limited,
piecemeal data submission that currently exists.
Fifth, we recognize that nursing facilities may incur some burden
in accumulating and submitting the section 1124(c) data (see section
IV. of this final rule for more information). As we have indicated,
though, the importance of quality care and the potential saving of
lives justifies additional burden on the part of the nursing
facilities. It is imperative that beneficiaries and their families are
aware of the persons and entities that own and operate nursing
facilities so they can make the best decisions regarding care.
Comment: Commenters expressed concern about the increase in
administrative burden and the allocation of resources that nursing
facilities will need to fulfill these reporting requirements,
particularly for multi-facility and multi-state organizations. A
commenter cited, as an example, the requirement to report changes
within 30 or 90 days, which the commenter stated could be frequently
necessary and will require constant monitoring by dedicated staff. This
commenter, as well as others, stated that assigning staff to address
the proposed reporting requirements could: (1) inhibit the facility's
ability to hire staff in other positions; and (2) negatively impact
patients by taking personnel away from the provision of care. Another
commenter contended that the proposed disclosure requirements far
exceed what most other Medicare and Medicaid enrolled healthcare
organizations are currently required to report to CMS. Other commenters
generally stated that some data (for instance, regarding additional
disclosable parties (ADPs)) could be difficult to secure, in some cases
due to confidentiality agreements.
Response: We again acknowledge the burden that nursing facilities
may incur in complying with our proposal's requirements. Yet we also
reiterate that, per section 1124(a) of the Act, nursing homes already
furnish to CMS some of the information referenced in section 1124(c) of
the Act via initial enrollments, revalidations, changes of ownership,
and other changes to this information within 30 or 90 days (as
applicable). This final rule would thus not increase the burden
associated with disclosing such information. As for data elements not
currently collected, and as a prior commenter noted, some states may
presently require the disclosure of some of this information, meaning
that: (1) the affected nursing homes may currently maintain this data
for Medicaid reporting purposes; and (2) these facilities would not
incur additional reporting burden under this final rule. In fact, some
facilities not in these states may nonetheless have this information on
hand as part of their normal business operations. We accordingly
believe--and based partly on our longstanding experience in requiring
section 1124(a) data submission--that the reporting burden on nursing
homes may be less than the commenters surmise. We note further that
while some section 1124(a) information, per provider feedback over the
years, can be challenging to secure, providers have generally been able
to obtain and report it. We are similarly confident that SNFs will be
able to obtain section 1124(c) data that is not currently required to
be disclosed.
Comment: A commenter stated that our provisions will lead to the
submission of vague and inaccurate data from various categories of
investors. This will undermine CMS' goal of collecting clear and useful
information regarding parties that exercise operational, financial, or
managerial control (OFMC) over nursing facilities.
Response: We respectfully disagree. We believe the data reporting
standards in the rule are clear as articulated. However, to avoid
provider uncertainty and to facilitate the clarity of the furnished
data, we will: (1) ensure that the data elements to be reported are
specifically identified and labeled on the Form CMS-855A; and (2) issue
sub-regulatory guidance and perform outreach to the nursing home
community regarding our data submission expectations. Moreover, we will
verify this data as fully as possible for correctness.
2. Revalidation
Comment: A commenter requested that CMS give nursing facilities at
least 90 days' advance notice if CMS intends to perform an off-cycle
revalidation of their enrollment.
Response: We typically do not furnish advance notice of our intent
to perform an off-cycle revalidation beyond the standard notification
letter sent to the provider requesting its submission of a revalidation
application within 60 days of the date of the letter. We believe 60
days is sufficient time for a provider to submit the required
revalidation information.
Comment: Several commenters stated that CMS should require Medicare
and Medicaid nursing facilities to report the section 1124(c) data on
an annual basis, rather than upon revalidation every 5 years. A
commenter stated, as an example, that a PEC that controls a nursing
home might make substantial changes to the facility's staffing, patient
care, and asset/debt ratio during its period of control that could harm
patients; requiring annual disclosures of PEC data would allow CMS to
have up-to-date information on such owners.
Response: Though we appreciate this suggestion, we are concerned
about the burden on nursing homes of what would amount to annual
revalidations of the section 1124(c) data as opposed to a 5-year
schedule. No other data on the Form CMS-855 is subject to annual
revalidations, and we do not believe we should establish an exception
for certain types of information on the application. However, and as
already mentioned, we reserve the right and plan to commence off-cycle
revalidations of SNFs to secure the section 1124(c) data once the Form
CMS 855A application is revised to collect it. Additionally, we will
continue to enforce our longstanding policy, codified in 42 CFR
424.516, that requires providers to report any changes to their
enrollment data (including, with this rule, the section 1124(c)
information) within the timeframes specified therein.
Comment: Several commenters were concerned that currently enrolled
nursing homes might not need to furnish the section 1124(c) data for
several years after the Form CMS-855A is revised. This is because the
rule only requires full disclosure upon initial enrollment, a 42 CFR
489.18 change of ownership, or revalidation, none of which might apply
to the facility for some time following the form's revision.
[[Page 80149]]
Response: We appreciate the commenters' concerns but emphasize
again that CMS can perform off-cycle revalidations. Accordingly, once
the Form CMS-855A application is revised to collect the section 1124(c)
data, we plan to commence off-cycle revalidations of SNFs to obtain it.
3. Medicaid
Comment: A commenter recommended that the final rule outline
specific requirements for state Medicaid programs to use in
operationalizing the Medicaid disclosure provisions. The commenter
believed this would: (1) minimize inconsistencies among states,
particularly with respect to multi-state providers; and (2) enable CMS
to monitor states' implementation of this rule.
Response: We previously noted that states have considerable
flexibility when administering their Medicaid programs within a broad
federal framework, and programs vary by state. While all states must
comply with federal Medicaid and CHIP provider enrollment requirements,
states have substantial discretion to establish: (1) additional
provider enrollment requirements; and (2) their own operational
procedures in implementing provider enrollment requirements. Consistent
with this, we believe each state should have the ability (and is in the
best position) to determine the most appropriate logistical means of
implementing this final rule's provisions.
Comment: A commenter stated that to ensure standardized data
reporting, CMS should: (1) require Medicaid nursing facilities to
report the section 1124(c) data via the Provider Enrollment, Chain, and
Ownership System (PECOS); (2) have states work with CMS to develop a
common dataset that would enable analyses of all Medicare and Medicaid
nursing facility ownership; and (3) build on existing processes to
reduce reporting burden and make the data more useable.
Response: We appreciate this comment. We intend to work with the
states regarding the coordination and publication of the submitted
data. This includes ensuring that consistent, organized, and thorough
information regarding Medicare and Medicaid nursing homes is published.
However, we believe each state should, consistent with states' existing
discretion regarding their enrollment processes, be able to determine
their own means of collecting the section 1124(c) data. We do not
believe the Medicare and Medicaid enrollment processes must be combined
for purposes of section 1124(c) data when they have remained largely
separate for all other enrollment information; this includes not having
Medicaid nursing homes report their section 1124(c) data via PECOS, to
which Medicaid providers do not currently have access or utilize for
Medicaid enrollment.
Comment: Noting the proposed rule stated that (per redesignated 42
CFR 455.104(f)) federal financial participation would be unavailable in
payments for nursing facilities that do not report required ownership
or control data, a commenter requested that CMS explain how this
oversight will occur, including any enforcement authorities given to
the Medicaid program.
Response: We routinely conduct oversight of Medicaid provider
enrollment requirements, such as through various audits, reviews, and
technical assistance efforts. In addition, states will continue to have
responsibility for establishing their own oversight and enforcement
mechanisms regarding the reporting of section 1124(c) data. If a
state's non-compliance is identified, we would follow our normal
processes related to the recovery of FFP associated with any identified
overpayments.
Comment: Commenters stated that CMS should share section 1124(c)
data gathered during Medicare enrollment with Medicaid agencies or
otherwise align the disclosure processes.
Response: As noted previously, we plan to work with the states
regarding the coordination and publication of the submitted data.
States will also be required to submit to CMS the section 1124(c) data
they receive. With respect to the collection of this information,
though, states will utilize their own means for this purpose. Indeed,
the Medicare and Medicaid programs and enrollment processes are
separate and often collect different types and quantities of data.
Comment: A commenter suggested that CMS consider expanding Medicaid
agencies' authority to require reporting on ownership structures to
include other types of long-term services and entities, such as
assisted-living facilities, adult day health programs, and senior
living communities.
Response: States currently have the authority to collect ownership
and control enrollment data above and beyond the minimum ownership and
control information outlined in 42 CFR part 455. This includes, but is
not limited to, obtaining section 1124(c)-type information from
enrollment-eligible provider types other than nursing facilities (to
the extent a state's particular laws and regulations require or permit
such collection).
Comment: A commenter stated that there are significant differences
between the proposed Medicare and Medicaid definitions. The commenter,
as well as others, stated that CMS should ensure in the final rule
that: (1) the definitions are the same; and (2) the proposed PEC and
REIT definitions are applied to Medicaid. Additional commenters also
recommended that CMS require (and not merely encourage) states to
collect PEC and REIT data from Medicaid nursing homes, with a commenter
stating that the final rule should: (1) outline a timeframe within
which states must begin collecting this data; and (2) describe how
states should consider this information in assessing the provider's
enrollment application. Other commenters stated that the proposed
Medicaid disclosure regulations should mirror the proposed Medicare
disclosure provisions in all aspects.
Response: We respectfully disagree that the Medicare and Medicaid
definitions are materially different. The definitions of, for instance,
organizational structure and ADP are similar and reflect the language
of section 1124(c) of the Act. In fact, the preponderance of Medicare
and Medicaid provisions we proposed are virtually identical. Any
variations in definition language or data collection policies are
largely attributable to differences in each program's unique
terminology, the structure of their respective regulatory sections, and
basic differences in program requirements. As we explained in the
proposed rule, we wish to maintain the deference generally afforded to
states in the operation of their Medicaid programs, including with
respect to provider enrollment; this includes the timeframes by which
they must implement section 1124(c) of the Act and how they assess this
information in their enrollment determinations. It is for this reason
that we did not propose to require states to, for example, collect PEC
and REIT data, though we encouraged them in the proposed rule to do so
and we reiterate this recommendation here. We also strongly encourage
states to use the same definitions for PEC and REIT as finalized in
this rule for the sake of consistent data collection.
Comment: Commenters stated that CMS should use the same reporting
timeframes for Medicaid nursing homes that it proposed in the 2011
proposed rule. Specifically, they contended that Medicaid nursing
facilities should furnish all the required disclosures upon enrollment,
on an annual basis to be determined by the state, and within
[[Page 80150]]
30 days after any change to any of the previous disclosures.
Response: Consistent with our proposed provisions, Medicaid nursing
homes will have to report the section 1124(c) data upon initial
enrollment and revalidation. In terms of the latter, the revalidation
periods are left to the states' discretion so long as revalidation is
performed at least as frequently as prescribed in 42 CFR part 455.
Hence, we are not requiring states to conduct annual revalidation of
the section 1124(c) information. Likewise, the establishment of
timeframes for reporting changes in Medicaid enrollment information
(which would include the section 1124(c) data) is a matter within the
states' purview.
4. Public Availability of Data
Comment: Many commenters urged CMS to furnish more specificity
(preferably in the final rule) concerning: (1) when, where, how, and
via which vehicle the section 1124(c) data will be publicly released;
and (2) the exact data that will be included. They added that it was
important that the information be published in full as soon as possible
but no later than the 1-year deadline referenced in section 6101(b) of
the Affordable Care Act.
Response: As we indicated in the proposed rule, we will issue sub-
regulatory guidance regarding the publication of the section 1124(c)
data. This guidance will outline the timing, content, and means of the
data publication, as well as other related information. We agree with
the commenters regarding the importance of publishing the section
1124(c) data as soon as possible, and we intend to do so within the
aforementioned 1-year timeframe.
Comment: Many commenters recommended that CMS publish the section
1124(c) data: (1) on the Care Compare website, <a href="http://cms.data.gov">cms.data.gov</a>, and/or
other easily accessible and searchable/sortable website; (2) using
plain language; and (3) to allow consumers to identify and examine
quality ratings for multiple nursing facilities that may be owned or
controlled by the same PEC. Several commenters more specifically urged
CMS to make parent company and related party data for each nursing home
available on its Care Compare website, including information indicating
whether a facility is part of a chain. They added that the data must be
organized to enable stakeholders to detect patterns in quality,
ownership, management, etc.
Response: We appreciate these suggestions and will consider them as
we develop our sub-regulatory guidance and prepare to publish the
section 1124(c) data. We concur with the commenters concerning the need
to disseminate the section 1124(c) information in an easy-to read-
manner: (1) via an accessible, navigable, and searchable website that
users can understand; and (2) in a manner that enables users to search
for trends, relationships, and connections in nursing homes' ownership
structures.
Comment: A commenter stated that CMS should make the section
1124(c) data publicly available using common identifiers (for example,
CMS Certification Number (CCNs)) that are linked to existing CMS data,
such as nursing facility quality measures, staffing rates, survey
deficiencies, and nursing facility resident demographics.
Response: We appreciate these recommendations and agree that
identifiers such as CCNs could help users locate nursing homes and
their section 1124(c) information. Future sub-regulatory guidance will
address whether (and, if applicable, the extent to which) the section
1124(c) data will link to other CMS information like nursing home
quality measures or to cost reports.
Comment: Several commenters recommended that CMS post section
1124(c) information on the Care Compare website in lieu of publishing
it only on <a href="http://cms.data.gov">cms.data.gov</a>. A commenter stated that many nursing home
residents and their families are unfamiliar with the <a href="http://cms.data.gov">cms.data.gov</a>
website and that said website can be challenging to use.
Response: We appreciate and will consider these comments as we
prepare our sub-regulatory guidance and determine the best vehicle by
which to publish the section 1124(c) data.
Comment: A commenter stated that CMS should make available for
public review data regarding the facility's ownership, budgets,
expenditures, and payments. The location of this data, the commenter
added, should be furnished to residents and other interested parties,
and the information should be provided on facility websites, Care
Compare, and in admissions and marketing materials.
Response: Certain ownership data reported per section 1124(a), such
as the names of SNF owners and their percentages of ownership, is
already public via Care Compare. Additional ownership information under
section 1124(c) of the Act will, as previously noted, be published
publicly. Regarding budgets, expenditures, and payments, however, this
information has never been collected as part of the enrollment process,
we did not propose to do so in the proposed rule, and section 1124(c)
of the Act does not require its acquisition.
Comment: A commenter stated that Care Compare: (1) should include
information from the data file on nursing home ownership posted to
<a href="http://data.cms.gov">data.cms.gov</a> in September 2022 and not simply a link thereto; and (2)
must be made easily searchable by chain, common ownership and
operators, and across multiple states given the significant number of
for-profit nursing homes operated and/or owned by multi-state or
national chains or private equity firms.
Response: We thank the commenter for their suggestions and will
consider them as we prepare our sub-regulatory guidance and determine
the best vehicle by which to publish the section 1124(c) information.
We further appreciate the request that this information be provided on
Care Compare and will consider publishing the section 1124(c) data via
that vehicle. We will also ensure that the ownership data already in
Care Compare is included in the section 1124(c) data release if we
determine the best vehicle for the latter is something other than Care
Compare.
Comment: Several commenters stated that the section 1124(c) data
posting should include documentation verifying the accuracy of the
facility's information submission.
Response: We will, as needed, request supporting documentation to
validate the disclosed data. However, verification documentation that
is submitted as part of the current enrollment process is generally not
made public, and we do not intend to do so with the section 1124(c)
data.
Comment: A commenter stated that CMS should incorporate into the
final rule the current requirements on the Form CMS-855A that: (1) the
provider submit an organizational diagram identifying all entities
identified in Section 5 of the Form CMS-855A and their relationship
with the provider and each other; and (2) nursing homes submit a chart
identifying the organizational structures of all its owners. Additional
commenters recommended that CMS publish all organizational diagrams
submitted by providers.
Response: The requirement to submit these diagrams is consistent
with our authority under 42 CFR 424.510(d)(2)(ii) to collect
documentation that helps verify details regarding the provider's
ownership (for example, whether a particular owner is direct or
indirect). This is akin to other existing Form CMS-855A documentation
submission requirements per Sec. 424.510(d)(2)(ii), such as sales
agreements, adverse legal
[[Page 80151]]
action documentation, and documentation verifying non-profit status,
none of which are explicitly identified in 42 CFR part 424, subpart P.
Since these and other documents are requested under our authority in
Sec. 424.510(d)(2)(ii), we deem it unnecessary to articulate all of
them in regulation.
Concerning the publication of organizational diagrams, we
previously noted that we presently publish certain ownership data
submitted by providers on the enrollment application, some of which
mirrors the information that providers furnish on the organizational
charts. We will release, in a yet-to-be-determined manner and form,
those portions of the SNF organizational charts containing data that
must be published under section 1124(c).
Comment: A commenter stated that CMS should make available a public
database that identifies and tracks entities that have common ownership
of nursing homes or exercise managing control over them.
Response: We appreciate and will consider this comment as we
prepare our sub-regulatory guidance and determine the best vehicle by
which to publish the section 1124(c) information.
Comment: A commenter opposed our intention to publicly post section
1124(c) data because it would involve releasing the names of the
nursing facility's employees. The commenter believed this could
discourage persons from seeking employment with nursing facilities,
hence harming the nursing facility industry.
Response: While we recognize the commenter's concern, we emphasize
that section 6101(b) of the Affordable Care Act requires the public
disclosure of the section 1124(c) data. We further note that not every
employee of a nursing facility will have to be reported on the Form
CMS-855A and, consequently, be included in the public data posting.
Only those parties that must be disclosed under section 1124(c) of the
Act will be part of said posting.
5. Timeframes for Reporting Changes of Information
Comment: Several commenters supported our proposal to require
changes to the section 1124(c) data to be reported within, as
applicable, 30 days or 90 days of the change.
Response: We appreciate the commenters' support.
Comment: A commenter recommended that CMS increase the reporting
timeframe for changes in ADPs from within 90 days of the change to 120
days.
Response: We first reiterate that the timeframe for any such change
in an ADP depends, as we proposed and consistent with existing Sec.
424.516(e)(1) and (2), on whether it involves a change in ownership or
control. If it does, the reporting period is within 30 days of the
change; if it does not, the period is 90 days. Regardless, we do not
believe the 90-day timeframe should be increased to 120 days. It is
important that CMS receive updated enrollment data as soon as possible,
and we consider 90 days to be an adequate amount of time for SNFs to
report non-ownership/control changes to us. CMS will identify in future
sub-regulatory guidance those changes in section 1124(c) data that
qualify as ownership/control changes and those that do not.
Comment: Several commenters suggested timeframes for reporting
changes in section 1124(c) data that are stricter than what we
proposed. These included requiring: (1) any change in direct or
indirect ownership of a parent company, parent organization, or ADP to
be disclosed at least 30 days before the change takes effect; (2) all
other changes to data concerning the parties referenced in (1) to be
reported within 30 days of the change; and (3) any change in nursing
home ownership or management to reported at least 90 or 120 days prior
to the change.
Response: We do not currently require changes in provider
enrollment data to be reported before their occurrence because
providers and suppliers often do not and cannot know when a change will
happen. To illustrate, the voluntary or involuntary departure of a
managing employee can be sudden, making prior notice thereof to CMS
impossible. We thus believe that applying to section 1124(c) data our
proposed timeframes of 30/90 days post-change is appropriate. As for
the suggestion in (2) earlier, some of these changes could qualify as a
change in ownership/control (for example, a change in managing
employees) and thus have to be disclosed within 30 days consistent with
the commenters' recommendation.
6. Certification and Accuracy of Data, Including Penalties for Non-
Compliance
Comment: Several commenters supported our proposal that SNFs
certify on the Form CMS-855A that the section 1124(c) data is ``true,
correct, and complete'' without a ``to the best of my knowledge''
qualifier while we continue to review the potential operational
implications of section 1124(c)(3)(A) of the Act.
Response: We appreciate the commenters' support.
Comment: Several commenters stated that the SNF's parent company's
or sole owner's chief executive officer (CEO) (and not simply any
representative of the nursing facility) should be required to certify
(under penalty of perjury) the accuracy of all section 1124(c)
disclosures. If the CEO is unavailable, a designee of the CEO who has
full knowledge of the SNF's ownership should certify the information's
accuracy.
Response: We have specific and strict regulatory requirements
regarding who can sign the Form CMS-855A on behalf of a provider. To
illustrate, an initial Form CMS-855A application must be signed by an
authorized official. Existing Sec. 424.502 defines an authorized
official as an appointed official to whom the organization has granted
the legal authority to enroll it in Medicare, to make changes or
updates to the organization's Medicare status, and to commit the
organization to fully abide by Medicare's statutes, regulations, and
program instructions. Examples of such high-ranking persons, as
outlined in the Sec. 424.502 definition, include a chief executive
officer, chief financial officer, general partner, chairman of the
board, or direct owner. Therefore, it is not as though any person,
regardless of status, can serve as a provider's authorized official.
Only those that meet the aforementioned definition may do so. This
requirement helps ensure the correctness and thoroughness of the
furnished data without a need to require the commenter's recommended
signatories to sign the Form CMS-855A.
Comment: Several commenters suggested that, along with denial or
revocation/termination of Medicare/Medicaid enrollment, CMS should
consider imposing the following penalties should the nursing home fail
to completely, truthfully, and accurately report the required section
1124(c) data: (1) withholding of payments; (2) assessment of a $10,000
civil money penalty; (3) fines; and (4) immediate suspension, in whole
or in part, of payments to providers that submit materially false
information. Repeated failures should warrant increased sanctions. They
and other commenters stated that any penalty must be significant enough
to ensure compliance with the reporting requirements, though some
commenters added that the sanction should be commensurate with the
reporting failure in question (for example, material failures warrant
more significant penalties) and/or proportional to the parent company's
revenue. Additional commenters suggested criminal penalties for owners
[[Page 80152]]
and operators who knowingly submit false information.
Response: As the commenters noted, CMS has the authority to deny or
revoke enrollment under Sec. Sec. 424.530(a)(4) and 424.535(a)(4),
respectively, if the provider certified as ``true'' misleading or false
information on the enrollment application to enroll or maintain
enrollment in Medicare. A provider that is denied enrollment on this
basis is subject to a reapplication bar of up to 3 years per Sec.
424.530(f),\15\ and a provider revoked under Sec. 424.535(a)(4) is
subject to (with certain exceptions) a maximum 10-year reenrollment bar
under per Sec. 424.535(c). We further state in Sec. Sec.
424.530(a)(4) and 424.535(a)(4) that offenders may be subject to either
fines or imprisonment, or both, in accordance with current law and
regulations. Moreover, we can, as applicable, deny, revoke, or
deactivate enrollment (or reject an enrollment application) in certain
instances where the provider does not submit complete information to
us. We take very seriously the provider's obligation to furnish full
and accurate data, will do so with respect to the section 1124(c)
information, and will stand ready to take the applicable administrative
measures we have just outlined, including, as needed, referrals to law
enforcement. We are confident that the mechanisms we presently possess
to enforce compliance will help ensure the submission of correct and
thorough data.
---------------------------------------------------------------------------
\15\ CMS recently finalized an expansion of the maximum
reapplication bar to 10 years in a final rule placed on display at
the Federal Register on November 1, 2023, titled Medicare Program;
Calendar Year (CY) 2024 Home Health (HH) Prospective Payment System
Rate Update; HH Quality Reporting Program Requirements; HH Value-
Based Purchasing Expanded Model Requirements; Home Intravenous
Immune Globulin Items and Services; Hospice Informal Dispute
Resolution and Special Focus Program Requirements, Certain
Requirements for Durable Medical Equipment Prosthetics and Orthotics
Supplies; and Provider and Supplier Enrollment Requirements.''
---------------------------------------------------------------------------
Comment: Several commenters suggested that CMS establish a ``reward
system'' for finding and reporting errors in a facility's disclosure of
the section 1124(c) data. To illustrate, if an individual notifies CMS
that a facility furnished inaccurate information and CMS confirms that
the facility indeed did, the individual could be paid a modest fee
(though without supplanting existing whistleblower laws).
Response: We appreciate this suggestion, though we believe there is
no statutory authority for such a system as it relates to section
1124(c) information.
Comment: A number of commenters stated that CMS and the states
should: (1) perform auditing to verify the accuracy of reported section
1124(c) data; (2) analyze this data alongside cost reports, staffing
information, survey inspection results, and other relevant information;
(3) use the section 1124(c) data in determining who can participate in
Medicare and/or Medicaid and ensuring that high quality care is
provided; and (4) explain in the final rule how the auditing process
will work. They added that merely relying on the provider's attestation
(for example, the authorized official's signature on the Form CMS-855A)
that the submitted data are correct is insufficient to guarantee its
accuracy and that actual verification is required.
Response: We validate submitted enrollment information
notwithstanding the signing official's attestation that it is accurate
and complete, and we intend to take steps to verify the submitted
section 1124(c) data, too. The specific means of validation will be
clarified during the implementation process.
Comment: Commenters urged CMS to outline a definite timeframe for
completing its revisions to the Form CMS-855A to capture the section
1124(c) data. They stressed the importance of collecting this data as
soon as possible.
Response: Although we will furnish more information about the
timing of our planned Form CMS-855A revisions after the final rule is
published, we agree with the commenters regarding the importance of
revising the application and collecting the section 1124(c) information
as soon as feasible. This is indeed our aim.
8. Definitions/Terminology in Section 1124(c) of the Act
a. General Comment
Comment: Numerous commenters requested that CMS in the final rule:
(1) add definitions of certain terms used in section 1124(c) of the
Act, such as ``financial control;'' (2) include more specificity in
some of the proposed definitions; and (3) expand the scope of several
proposed definitions to include additional parties. Regarding the first
two requests, commenters stated that nursing facilities need more
clarification (via additional or revised definitions) to understand
what data must be disclosed; without this clarification, CMS might
receive superfluous and unnecessary information. Concerning the third
request, commenters expressed concern that some of the proposed
definitions (such as organizational structure) are too narrow and would
not capture enough data to clarify a nursing facility's ownership,
managerial, and operational structure.
Response: We appreciate these comments and note two things.
First, some of the more specific comments that follow identify
various terms that commenters wish to see defined in the final rule. We
believe the ordinary meanings of these terms are clear and that formal
definitions are unnecessary. However, we will provide clear examples of
their meaning, as well as factual situations that could fall within the
scope of a particular term, via sub-regulatory guidance to ensure that
all interested parties understand the new disclosure requirements.
There are, of course, parties that would clearly fall within some of
these definitions, such as a: (1) management company that runs the day-
to-day operations of the SNF (managing control); and (2) an
organization the SNF hires to manage all of its financial matters
(financial control). Yet we believe that sub-regulatory guidance allows
CMS to modify our planned sub-regulatory examples to provide greater
specificity in response to stakeholder questions and feedback and to
address the variety of factual scenarios that may arise. We stress
further that the two examples cited previously should not be construed
as establishing a minimum reporting threshold of control and influence;
the first example, for instance, is not meant to imply that any entity
with less managing control over the SNF need not be disclosed under
section 1124(c) or (a) of the Act.
Second, and regarding revisions of (and expansions to) some of our
proposed definitions, we are generally satisfied with these
definitions' scope and clarity. Although we are finalizing two
modifications to these definitions, most of the commenters' recommended
revisions involve changes that would collect data well beyond the scope
of what we proposed. Nonetheless, we will keep these comments in mind
and, if we determine in the future that collecting some of this
additional data is appropriate, we will take appropriate steps.
b. Additional Disclosable Party
Comment: A commenter recommended that CMS amend its proposed
definition of ADP to clarify that a party can have OFMC of a nursing
facility regardless of whether it has an ownership interest.
Response: We agree that a party can have OFMC without having an
ownership interest. Indeed, this has long been our position with
respect to our section 1124(a) reporting requirements. While we believe
this
[[Page 80153]]
interpretation is clear based on the statutory language and thus the
ADP definition need not be revised, we will restate this point in our
forthcoming sub-regulatory guidance.
Comment: Commenters suggested additions to the ADP definition to
ensure that CMS has a full understanding of the nursing facility's
ownership and managerial structure. The first addition would include
any party with an ownership or control interest (as that term is
defined in 42 CFR 420.201) in the nursing facility. The second would
include any party that directly or indirectly owns or controls an
equity interest in the nursing facility, its business, its parent
company or chain, or any other subsidiaries (including properties) that
equals or exceeds 5 percent of the total outstanding equity interest of
all equity owners in the nursing facility, its business, its parent
company or chain, or other subsidiaries. This could include an
individual or organization that receives or is entitled to receive
(directly or indirectly) 5 percent or more of the profits or revenues
of the nursing home, parent company, etc. The third would include any
person or entity who: (1) exercises any level of OFMC over the facility
or a part thereof; (2) provides any level of financial or cash
management services to the facility; or (3) provides any level of
management or administrative services, management or clinical
consulting services, or accounting or financial services to the
facility. The fourth would include all: (1) the nursing facility's
parent organizations and related parties (as the term ``related'' is
defined in 42 CFR 413.17(b)(1)), for purposes of cost reporting); and
(2) the owners and related entities of the parties described in (1).
Response: We do not believe section 1124(c) of the Act gives the
Secretary the authority to add persons and entities to the ADP
definition in section 1124(c)(5)(A) of the Act. As previously noted,
there is no provision in section 1124(c)(5)(A) of the Act akin to
section 1124(c)(5)(D)(vii) of the Act regarding the organizational
structure definition. Nonetheless, we believe much of the data the
commenters reference will still be captured under our proposal and, in
some cases, is collected today. For example, regarding the commenters'
first recommended addition, CMS currently collects information on all
parties with a 5 percent or greater direct or indirect ownership
interest in a nursing facility. (Section 1124(a) of the Act has no
minimum percentage threshold for reporting partnership interests.) In
many instances, this involves the disclosure of multiple layers of the
facility's ownership. (As a further illustration, suppose the nursing
facility is 100 percent owned by Entity W, which is 75 percent owned by
Entity X, which is 90 percent owned by Entity Y, and which is 90
percent owned by Entity Z. Since all these owners--representing four
layers of ownership--hold a 5 percent or greater direct or indirect
ownership interest in the nursing home, they must be reported.)
Concerning the third recommendation, these parties already fall within
the proposed ADP definition and may include parent companies and other
owners (for instance, the owning parent exercises managerial control
over the facility).
As for the fourth suggestion, parties that are ``related'' to the
nursing facility must be disclosed to the extent required under section
1124(a) or 1124(c) of the Act, though the organizational charts
referenced on the Form CMS-855A application will also capture data
regarding related entities.
Comment: A commenter expressed concern that it could prove
difficult for nursing facilities to obtain and furnish data on ADPs and
the relationships between them. The commenter stated that the facility
may not know or be able to ascertain the organizational structures of
all ADPs (for example, consulting or professional services firms) and
related parties. The commenter requested that CMS: (1) outline the
efforts that facilities must make to secure ADP data; (2) explain how
the facility would demonstrate such efforts; and (3) state that
facilities will not be held accountable for failing to disclose data it
could not reasonably be expected to secure.
Response: We previously acknowledged that securing data regarding
owning or managing organizations can prove challenging. Yet we have
found with respect to section 1124(a) data that nursing facilities have
typically been able to obtain it and to also furnish the required
organizational charts. We believe this will also be true with section
1124(c) data, such as ADP information. Given the importance of the
section 1124(c) data, we do not believe any exemptions to its
reporting, such as the commenter suggests, should be granted. The
information must be disclosed without exception, and this will be
demonstrated via the submission of full, complete, and accurate data.
Our position is that if a nursing facility wishes to receive Medicare
or Medicaid payment, it must comply with all requirements for doing so,
one of which is the disclosure of the information in question.
Comment: Regarding the disclosure of parties that furnish the
services outlined in the ADP definition (for example, consulting,
financial), a commenter questioned whether this would include, for
instance: (1) all corporate office staff who support individual
facilities within a multi-site organization; (2) an external nurse
consultant who offers brief assistance with preparing a plan of
correction following an annual nursing home survey but otherwise does
not provide services to the facility; (3) all staff who work in the
billing department; (4) a nursing staff member who supervises one unit
within the facility (since the ADP definition references ``part(s)'' of
a facility); (5) unaffiliated, independent auditors; and (6) an
independent, unaffiliated organization that provides template policies
and procedures. The commenter believed that disclosing this sixth party
would seem unnecessary, since nursing home leadership must separately
tailor, adopt, and implement those policies.
Response: We believe the ADP definition is clear on its face.
However, CMS' forthcoming sub-regulatory guidance will include examples
(some of which may mirror those the commenter presents) to help nursing
facilities understand which ADP data must be reported.
Comment: Several commenters requested greater specificity as to the
exact types of services that fall within the categories of management
or administrative services, management or clinical consulting services,
or accounting or financial services to the facility under section
1124(c)(5)(A)(iii) of the Act.
Response: Again, we believe the ordinary meanings of the terms used
in the ADP definition, including those in section 1124(c)(5)(A)(iii) of
the Act (for example, financial services), are clear. Our sub-
regulatory guidance will nevertheless furnish examples of the types of
services that can fall within these categories.
Comment: A commenter stated that management entities under the ADP
definition should include any organization that is paid for furnishing
management services (or is paid management fees) regardless of that
organization's level of involvement in the facility's day-to-day
operations.
Response: We concur with the commenter's statement. We note that
the references to management in sections 1124(c)(5)(A)(i) and (iii) of
the Act contain no minimum threshold regarding the level of management
services or day-to-day involvement a party must furnish to qualify as
an ADP.
[[Page 80154]]
Comment: A commenter stated that CMS should, for each ADP, require
a detailed statement of the functions the ADP performs as part of any
contract or other arrangement with the nursing facility; this could
include, for example, identifying the specific type of administrative
services performed, such as payroll, accounting services, or insurance
billing.
Response: We appreciate this recommendation. We agree that the
facility must identify the types of services, control, etc., the ADP
provides to or has over the nursing facility so that CMS can evaluate
compliance with the statutory and regulatory requirements. This will
also enable CMS to better understand the ADP's precise relationship to
the nursing home. We will keep this comment in mind when considering
revisions to the Form CMS-855A.
Comment: A commenter recommended that nursing homes submit an
explanation of how each ADP is related to it (for example, shared
ownership, familial relationship, officer/director). This explanation,
the commenter added, should list all persons who are employed or paid a
salary by each ADP. It should also identify whether any entity involved
in leasing, subleasing, or owning the property (including any direct or
indirect property owners) is a REIT or affiliated with a REIT; this
should include the REIT's identity and a description of the
arrangement/agreement between the nursing facility and its REIT
landlord.
Response: For reasons similar to those in our previous response, we
concur that each ADP should identify on the Form CMS-855A its
relationship with the facility, which could include lease and sub-lease
arrangements. Yet we do not believe a list of all the ADP's employees
and paid personnel is warranted for several reasons. First, section
1124(c) does not contemplate the collection of all such persons.
Second, some ADPs may have thousands of employees. Reporting all of
them could pose an undue burden on the nursing facility, particularly
since some persons might, for instance, have no involvement with the
ADP's contractual relationship with the facility. Insofar as the
commenter's recommendations regarding REITs, and for each entity
disclosed under section 1124(a) or (c) of the Act, the nursing facility
will have to identify whether that organization is a REIT. Furthermore,
and as already noted, Medicare nursing facilities are currently
required per the Form CMS-855A to furnish: (1) a diagram identifying
the organizational structures of all its owners, which can include
REITs; and (2) an organizational chart identifying all entities listed
in Section 5 of the Form CMS-855A (including REITs) and their
relationships with the provider and with each other. We believe our
current and proposed disclosure requirements will encompass much of the
data the commenter suggested that we collect.
Comment: A commenter urged CMS to clarify the proposed ADP
definition. Without this elucidation, the commenter believed that
facilities will interpret the definition too broadly, resulting in the
disclosure of persons (for example, consultants that do not own,
control or manage the facility's operations) who need not have been
reported.
Response: We reiterate our view that the ADP definition is clear.
Yet we will ensure our forthcoming sub-regulatory guidance furnishes
examples regarding the ADP definition to help nursing homes understand
the scope of the reporting requirements.
Comment: A commenter recommended that PECs and REITs be included as
ADPs.
Response: Although, as stated, we do not believe section 1124(c) of
the Act permits us to add parties to the ADP definition, we believe
that some PECs and REITs will fall within one of the ADP categories in
section 1124(c) of the Act regardless. A REIT might qualify as an ADP
by, for example, exercising financial control over the nursing
facility, leasing or subleasing real property thereto, or owning at
least 5 percent of said real property. PECs, meanwhile, could meet the
ADP definition by having operational, managerial, or financial control
over the nursing home. Even if the PEC or REIT does not qualify as an
ADP, it would have to be identified as a PEC or REIT per our Form CMS-
855A revisions if the organization must otherwise be reported under
section 1124(a) or (c) of the Act. Consequently, considerable
information about owning, managing, and leasing PECs and REITs will be
reported irrespective of whether these entities are explicitly
referenced in the ADP definition.
c. Managing Employee
Comment: Several commenters recommended that CMS specifically
include medical directors within the definition of managing employee. A
commenter further suggested that the definition include persons, such
as consultants, who influence the finances and operations of a facility
but may not be permanent staff; the commenter believed this would
recognize the involvement of private-equity-backed management services
companies in health care.
Response: In the Calendar Year 2024 Home Health Prospective Payment
System final rule, which was published in the Federal Register on
November 13, 2023 (88 FR 77676), we revised our current managing
employee definition in Sec. 424.502 to explicitly include SNF and
hospice medical directors and administrators.\16\ Specifically, we
added the following language to the end of the current managing
employee definition: For purposes of this definition, this includes,
but is not limited to, a hospice or skilled nursing facility
administrator and a hospice or skilled nursing facility medical
director. We believe this change will make clear that SNF medical
directors are managing employees, a stance we have held for many years.
---------------------------------------------------------------------------
\16\ Medicare Program; Calendar Year (CY) 2024 Home Health (HH)
Prospective Payment System Rate Update; HH Quality Reporting Program
Requirements; HH Value-Based Purchasing Expanded Model Requirements;
Home Intravenous Immune Globulin Items and Services; Hospice
Informal Dispute Resolution and Special Focus Program Requirements,
Certain Requirements for Durable Medical Equipment Prosthetics and
Orthotics Supplies; and Provider and Supplier Enrollment
Requirements.
---------------------------------------------------------------------------
We note that our February 15, 2023, proposed change to this
definition did not include the previously noted language. With the
finalization of the managing employee definitions in both the November
1, 2023, final rule and the present nursing home disclosure final rule,
paragraph (1) of the managing employee definition will incorporate the
definition we finalized in the November 1, 2023, final rule. Paragraph
(2) will include the second paragraph of the definition we are
finalizing in this final rule.
Concerning the remaining comment, it is unnecessary for someone to
be an employee or permanent staff member to qualify as a managing
employee. This is consistent with our existing managing employee
definition in Sec. 424.502, which states that a person can be a
managing employee ``whether or not the individual is a W-2 employee of
the provider or supplier.''
Comment: A commenter stated that the facility's medical director
should not be identified as management when the nursing home data is
published.
Response: We respectfully disagree. As already mentioned, we have
long taken the stance that SNF medical directors qualify as managing
employees. Each medical director will hence be designated as such when
we publish the section 1124(c) data.
[[Page 80155]]
d. Operational, Financial, or Managerial Control (OFMC)
Comment: A commenter recommended that CMS in the final rule discuss
and clearly define (with accompanying examples) a party that exercises
OFMC over the facility or a part thereof.
Response: We did not propose to define ``operational, financial, or
managerial control'' because we believe the ordinary meanings of these
terms are clear. Nevertheless, we plan to outline examples of possible
OFMC in our sub-regulatory guidance and will, as needed, consider
proposing an OFMC definition in future rulemaking.
Comment: A commenter stated that the definition of ``managerial
control'' should include any entity that: (1) receives and approves
facility budgets; or (2) approves or has the right to approve any
nursing home operational expenditure. Several other commenters
suggested defining managerial control as having the power (directly or
indirectly) to influence or direct the day-to-day operation of an
institution, organization, or agency, either under contract or through
some other arrangement. This would include any party that is a related
organization under Sec. 413.17.
Response: We believe the meaning of ``managerial control'' is
plain. As already noted, however, we intend to provide examples in sub-
regulatory guidance to help ensure that nursing homes understand these
reporting requirements.
Comment: A commenter suggested that CMS define ``control'' as the
ability to direct the operation or management of the nursing facility,
including through intermediary or subsidiary entities. Another
commenter recommended defining ``control'' as direct or indirect
exercise of substantial control. Substantial control, according to the
commenter, would involve: (1) board representation; (2) ownership or
control of a majority of the voting power or voting rights of the
reporting company; (3) rights associated with any financing arrangement
or interest in a company; (4) control over one or more intermediary
entities that separately or collectively exercise substantial control
over a reporting company; (5) arrangements or financial or business
relationships (whether formal or informal) with other individuals or
entities acting as nominees; or (6) any other contract, arrangement,
understanding, or relationship. Another commenter suggested defining
control consistent with the same definition of the term in Sec.
413.17. It could include, the commenter stated, language from the
Medicare Provider Reimbursement Manual stating that the Sec. 413.17
definition includes ``any kind of control, whether or not it is legally
enforceable and however it is exercisable or exercised; it is the
reality of the control which is decisive, not its form or the mode of
its exercise.'' An additional commenter stated that CMS should
explicitly state that control includes chain or parent company
activity.
Response: We appreciate these suggestions but believe the meaning
of ``control'' is clear.
Comment: Several commenters sought clarification of the meaning of
``or a part thereof'' (cited in section 1124(c)(5)(A)(i) of the Act) in
the context of OFMC over the facility.
Response: We believe the meaning of ``or a part thereof'' is clear.
Nonetheless, we will provide examples of the term ``part'' in our sub-
regulatory guidance to assist nursing homes in reporting the section
1124(c) data.
Comment: Several commenters recommended that CMS define
``operational control'' (with minor variations among the commenters'
suggested definitions) as an individual or entity that has the power
(directly or indirectly) to: (1) to influence or direct the actions or
policies of any part of either the nursing facility or any ADP; or (2)
choose, appoint, or terminate: (i) any member of the board of directors
or management committee; (ii) any manager or managing member; (iii) any
member of senior management of the nursing facility or its business,
including its chain or parent company; or (iv) any other person or
entity that participates in the operational or financial oversight of
the facility or its business. Another commenter stated that operational
control should include parties that guide the overall operation of the
nursing home, including setting policies and budgets.
Response: Our sub-regulatory guidance will include examples of
potential operational control, though we believe the term's meaning is
plain. Yet we note that section 1124(c)(5)(A)(i) of the Act only
references OFMC over the facility itself or a part thereof. It does not
include OFMC over the facility's parent or another ADP. Hence, our sub-
regulatory examples will address OFMC over the facility rather than
over other organizations.
Comment: Additional commenters recommended that CMS define
``financial control'' as a party that directly or indirectly: (1) has
the power to influence, direct, or manage the finances of the facility
or an ADP; (2) receives or is entitled to receive 5 percent or more of
any of the profits or revenues of the facility, its business, or its
properties during any time period; or (3) owns or controls an equity
interest in the facility, its business, or its properties that is equal
to or exceeds 5 percent of the total outstanding equity interest of all
equity owners in the facility, its business, or its properties. Another
commenter stated that the financial control concept should take into
account complex ownership structures.
Response: We believe the phrase ``financial control'' is plain on
its face, though our sub-regulatory guidance will furnish examples so
that nursing homes understand the reporting requirements.
e. Ownership Interests
Comment: Several commenters expressed concern about limiting the
ownership interest for financial control to 5 percent, with a commenter
stating that the 5 percent threshold inaccurately reflects the complex
ways that certain owners (including PECs) operate and hide connections
to other entities and individuals. Commenters suggested that: (1) 5
percent ownership be an aggregate across all nursing homes in which a
party holds an interest (and not simply a 5 percent interest in a
single facility); or (2) change the 5 percent standard to any ownership
interest regardless of the percentage involved. A commenter stated that
the first suggestion regarding aggregation would prevent individuals
from avoiding disclosure by holding several investments in nursing
homes slightly below the percentage threshold. Another commenter stated
that CMS should at least acknowledge that ownership interests can be
shielded from disclosure by having the interest be, for example, 4.9
percent.
Response: Section 1124(a) of the Act requires disclosure of the
provider's 5 percent or greater direct or indirect owners (excluding
partnerships, which have no minimum threshold). Too, sections
1124(c)(5)(A)(ii) and (c)(5)(D)(i) of the Act, which discuss ADPs,
explicitly reference a 5 percent standard. Although, under sections
1124(c)(5)(D)(ii) and (iii) of the Act, general partnership and limited
lability company ownership interests have no minimum percentage for
disclosure, limited partnerships have a 10 percent threshold. There
are, accordingly, clear parameters in section 1124 of the Act regarding
the reporting of certain types of ownership interests. While we
recognize the commenters' concerns about potential circumvention of the
aforementioned 5-percent limit, we do not believe we have the statutory
authority to: (1) collect ownership interests below the current
specified
[[Page 80156]]
thresholds; and (2) interpret the 5 percent threshold as meaning
ownership interests across multiple providers that together total 5
percent. To illustrate the latter situation in the context of section
1124(a) of the Act, suppose Entity W has a 2 percent ownership interest
in Provider X, 2 percent in Provider Y, and 2 percent in Provider Z.
(None of the entities are partnerships.) The 5 percent standard applies
to an ownership interest in a single provider, not a combined 5 percent
across several providers. In our example, therefore, since Entity W
does not own at least 5 percent of X, Y, or Z, Entity W need not be
reported as an owner on X's, Y's, or Z's enrollment application.
Comment: A commenter stated that CMS should adopt a broad
definition of ``ownership interest'' so that facilities cannot use
shell companies, affiliates, and financial instruments to evade
reporting requirements.
Response: As explained previously, many of the entities the
commenter references must already be reported per section 1124(a) of
the Act; this includes indirect owners of at least 5 percent of the
provider, such as holding companies. We also noted the organizational
charts that must be furnished which identify, for instance, some of the
provider's affiliates and the relationships between them.
Comment: A commenter recommended that CMS define ``ownership
interest'' such that it includes, for instance, equity, stock,
preorganization certificates, voting trust certificates, certificates
of deposit for an equity security, interest in a joint venture, any
capital or profit interest in an entity, or any other instrument,
contract, arrangement, understanding, relationship, or mechanism used
to establish ownership.
Response: Section 420.201 currently defines an ``ownership
interest'' as ``possession of equity in the capital, the stock, or the
profits of the disclosing entity.'' (The term ``disclosing entity''
includes providers and suppliers per Sec. 420.201.) We believe this
definition broadly captures many of the matters the commenter cites.
Comment: Several commenters recommended that CMS insert ``direct or
indirect'' before the word ``ownership'' in paragraph (1) (which
addresses corporations) of the proposed ownership structure definition
in Sec. Sec. 424.502 and 455.101. Other commenters stated that this
paragraph (1) should also clarify that a corporation can be owned by
another corporation.
Response: While we did not include ``direct or indirect'' in
paragraph (1), our longstanding definition of owner in Sec. 424.502
references direct and indirect owners. This is consistent with section
1124(a)'s requirement that all 5 percent or greater direct or indirect
owners be disclosed. We interpret the ``ownership'' reference in
paragraph (1) in the same manner and do not believe the regulatory text
needs to be updated in the final rule to reflect this. Concerning
corporate ownership, we often see providers and suppliers that are
corporations under the ownership of other corporations.
Comment: A commenter recommended that CMS limit the meaning of
``ownership interest'' to those parties than can remove or replace a
general partner or managing member without cause. The commenter
believed this modification would better reflect an owner's actual level
of influence and be consistent with the definition of ``voting
security'' in 15 U.S.C. 80a-2(a)(42).
Response: We believe the commenter is referencing ownership in the
context of disclosure thereof (for instance, under section 1124(a) or
(c) of the Act) rather than the ``ownership interest'' definition in
Sec. 420.201. To this extent, we respectfully disagree with the
commenter. There is no reporting exception in section 1124(a) or (c) of
the Act for owners that otherwise meet the requirements for disclosure
but do not have the type of authority or influence the commenter cites.
Indeed, if we were to limit ownership disclosures only to those parties
with such influence, many indirect owners, including holding companies,
might not be reported. This would be contrary to both the statute and
our need to have as full a picture as possible of a provider's or
supplier's ownership structure.
Comment: A commenter stated that CMS should not require nursing
facilities to disclose indirect owners because such parties generally
lack the ability to control and operate a nursing facility.
Response: We respectfully disagree. Again, section 1124(a) of the
Act is clear that persons and entities with at least a 5 percent direct
or indirect ownership in the nursing facility must be disclosed.
Capturing indirect ownership data also helps CMS understand the scope
of the provider's organizational framework.
f. Organizational Structure
Comment: Several commenters recommended that the term ``trust'' in
the organizational structure definition: (1) require identification of
the trustees and beneficiaries of the trust; and (2) specifically
reference REITs.
Response: Section 1124(c)(5)(D)(v) of the Act includes the trust's
trustees within the definition of organizational structure. However,
beneficiaries are not included. Although section 1124(c)(5)(D)(vii) of
the Act permits the Secretary to include within the organizational
structure definition any other person or entity as deemed appropriate,
the addition of trust beneficiaries would require rulemaking. We may
consider the commenters' suggestions regarding the term ``trust''
(including that pertaining to REITs) for future rulemaking.
Comment: A commenter stated that our proposed definition of
organizational structure (which mirrors that in section 1124(c)(5)(D)
of the Act) is overbroad and should be restricted to ease the burden on
disclosing facilities. In this vein, the commenter stated that a
minimum 25 percent ownership threshold for reporting should apply to
interests in limited partnerships and limited liability companies. The
commenter contended that this modification, besides reducing burden,
would clarify that certain owners do not have managerial or decision-
making authority over the business.
Response: We respectfully disagree with the commenter on several
grounds. First, section 1124(c) of the Act clearly outlines the
interests and parties that fall within the definition of organizational
structure. While, as mentioned, the Secretary has the authority under
section 1124(c)(5)(vii) of the Act to add persons and entities to the
scope of this definition, there is no authority in section 1124(c) of
the Act to restrict the definition, such as by applying a higher
threshold percentage (for example, 25 percent) for reporting ownership
interests. Second, and as already noted, it is critical that CMS obtain
as much background as possible about the nursing facility's ownership
structure, even if certain owners may not exercise day-to-day control
over the provider. Only in this manner can we truly ascertain the scope
of parties that own and operate the nursing facility.
Comment: Several commenters stated that the organizational
structure definition should include the following phrase from section
1124(c)(5)(D)(vii) of the Act: ``any other person or entity, such
information as the Secretary determines appropriate.'' The commenters
believed this would give CMS the authority to require additional
parties and interests to be disclosed.
Response: The quoted language in section 1124(c)(5)(D)(vii) of the
Act, as already mentioned, gives the Secretary the authority to include
additional parties and interests within the
[[Page 80157]]
organizational structure definition. We do not need to include this
language within our proposed organizational structure definition to
retain such authority. However, any addition of parties and interests
to this definition would require future rulemaking.
Comment: Several commenters suggested that the proposed
organizational structure definition in Sec. 424.502 include the
following categories, which would be codified respectively as
paragraphs (7), (8), and (9) within the definition: (i) a financial
investment entity (including a private equity investment company) and
any partner, limited partner, or investor that has a 5 percent or
greater ownership or equity interest in the entity; (ii) if an ADP does
not meet any of the definitions contained in paragraphs (1) through
(7), the name and contact information of the person or entity and any
other information the Secretary determines appropriate; or (iii) if an
entity listed in sections (1) through (8) is not the parent
organization, the corresponding organizational structure for all direct
or indirect owners of that entity back to the parent organization of
the initial disclosing entity.
Response: We appreciate these suggestions and may consider them for
future rulemaking.
Comment: A commenter recommended that the organizational structure
definition include investment firms (such as private equity firms or
funds) and any partner or limited partner with an ownership interest in
the firm or fund that exceeds 5 percent.
Response: We appreciate this suggestion and may consider it for
future rulemaking. We note that with our previously referenced revision
to the Form CMS-855A, the provider or supplier (including nursing
homes) will have to disclose whether an entity reported in Section 5
(or its successor or supplementary section) of the application is a PEC
or REIT. With this, some of the entities to which the commenter refers
will ultimately be disclosed irrespective of whether we pursue the
rulemaking the commenter recommends.
Comment: A commenter stated that CMS should strike the proposed
language ``with respect to a skilled nursing facility defined at
section 1819(a) of the Act'' from proposed Sec. 424.516(g)(1). The
commenter contended that this language: (1) is not in the original
statute; and (2) appears to apply the organizational structure
definition only to nursing facilities and not to all ADPs, which would
defeat section 1124(c)'s purpose.
Response: We respectfully disagree. The language the commenter
cites is referenced in section 1124(c)(5)(B) of the Act, which defines
a facility as a skilled nursing facility ``as defined in section
1819(a)''; or a nursing facility ``as defined in section 1919(a).'' To
clarify which types of facilities are the subject of our provisions--
specifically, SNFs and nursing facilities--we believe that referencing
the applicable statutory provisions is necessary. In other words, the
language in the opening of our proposed organizational structure
definition that reads ``Organizational structure means, with respect to
a skilled nursing facility defined at section 1819(a) . . . . .''
simply confirms that the definition applies to SNFs as opposed to, for
example, a hospital or home health agency. Moreover, the reference to
section 1819(a) of the Act does not restrict the proposed reporting
requirements in any way. The organizational structure of each ADP will
still have to be reported per Sec. 424.516(g)(1)(iv).
Comment: A commenter suggested including non-profit entities within
the organizational structure definition.
Response: The business types described in this definition include
all for-profit and non-profit entities. Section 1124(c)(5)(D) of the
Act makes no distinction between the two and contains no exemption for
non-profit entities. We have long interpreted section 1124(a) of the
Act in a similar manner when requiring the disclosures mentioned
therein. We hence do not believe a specific addition of non-profit
entities to the organizational structure definition is needed because,
in our view, said definition already includes such organizations.
g. Additional Suggested Definitions and Disclosures (Excluding PECs and
REITs)
Comment: Several commenters recommended that CMS require the
nursing facility to report its status as a ``chain provider'' in any
nursing home chain. For this purpose, some commenters suggested
utilizing the definition of ``chain provider'' in Sec. 421.404(a).
Others recommended defining ``chain'' consistent with this term's
definition in the Medicare Provider Reimbursement Manual; specifically,
as a group of two or more health care facilities or at least one health
care facility and any other business or entity owned, leased, or,
through any other device, controlled by one organization. These latter
commenters added that chain organizations: (1) should include, but not
be limited to, chains operated by proprietary, religious, charitable,
or governmental organizations; and (2) may include business
organizations engaged in activities not directly related to health
care. Additional commenters recommended that if the nursing facility is
part of a chain, CMS should require the disclosure of the names and
identifying information of: (1) all facilities within that chain; and
(2) the parent organization. Too, commenters stated that the facility
should include a detailed explanation of its relationship to the chain
(wholly owned, managed, etc.) and to the other facilities in the chain.
They further added that this explanation should address how the
ownership is structured between the facility and the chain level,
whether the provider is under contract to pay the chain (chain home
office) any fees, revenues or profits, and what type of support
(financial or otherwise) the chain provides the facility. The
commenters believed that requiring all of this chain-related data would
give CMS a clearer understanding of nursing home chain structures in a
manner that existing Section 7 of the Form CMS-855A does not.
Response: Like all certified providers, a nursing home currently
must disclose in Section 7 of the Form CMS-855A if they are part of a
chain. If it is, it must disclose: (1) identifying information about
the chain home office; (2) the chain home office administrator; (3) the
chain home office's business structure (for example, corporation, non-
profit religious organization, government-owned); and (4) the chain
home office's affiliation to the nursing facility (for instance, owned,
managed). Section 7 also specifically references the chain provider
regulations in Sec. 421.404. The aforementioned required
organizational charts also help CMS ascertain the ownership structure
between the provider and the chain. In sum, much of the chain data the
commenters cite is already reported via the Form CMS-855A. To the
extent information on nursing home chain data is collected under this
rule and falls within the scope of data referenced in section 1124(c),
it will be made publicly available.
CMS does not presently collect data in Section 7 regarding whether
the provider is contractually obligated to pay the chain home office
any fees, revenues, or profits, or what kind of financial or other
support the chain provides the facility. We appreciate the commenters'
recommendation that we do so, however, and may consider them as future
enhancements to the Form CMS-855A to the extent necessary.
Insofar as having individual facilities report reporting
identifying data on all
[[Page 80158]]
other providers in the chain, this is not currently required. We are
not seeking at this time to establish such a requirement, for some
chains may have many entities. Asking each facility to report all of
them could pose an excessive burden on each provider and lead to the
submission of duplicative information. We note, though, that CMS
assigns each chain a unique identifier known as a ``chain home office
number.'' When each certified provider in the chain enrolls, it must
report the chain data in Section 7, including the chain home office
number. This allows PECOS to identify all enrolled providers within the
chain. Consequently, although each provider is not required to disclose
all providers in its chain, much of this data is already furnished to
CMS via the individual enrollments of the providers in the chain.
Comment: Several commenters suggested that CMS define ``parent
corporation or parent organization.'' The term should mean, the
commenters stated, the legal entity that owns a controlling interest in
a nursing facility. The definition should further clarify that: (1) the
parent organization is the ``ultimate'' parent, or the top entity in a
hierarchy (which may include other parent organizations) of subsidiary
organizations that is not itself a subsidiary of any corporation; and
(2) a legal entity may be its own parent organization if it is not a
subsidiary of any other organization. Another commenter stated that
``parent organization'' and/or ``parent company'' should be defined as
an organization in control of another organization either directly or
indirectly through one or more intermediaries.
Response: While we appreciate this comment, neither section 1124(a)
or 1124(c) of the Act nor our proposed rule contains the term
``parent.'' Therefore, we believe this comment is outside the scope of
this rule. However, we do use this term sporadically in our sub-
regulatory provider enrollment manual instructions in CMS Publication
(Pub.) 100-08, Medicare Program Integrity Manual, Chapter 15. Should we
deem it necessary, we will consider clarifying this term in our manual
instructions.
Comment: Several commenters suggested that proposed Sec.
424.516(g) require a description (and accompanying diagram) of each
ADP's relationship with the nursing facility, with other ADPs, and all
parties identified in section 1124(a) of the Act. Another commenter
stated that the diagram should include all persons or entities that are
intermediaries between the facility and the parent company.
Response: The diagrams we currently require, which will capture
additional nursing home data per section 1124(c) of the Act, already
secure or will secure much of the data the commenters reference. We may
combine the currently required nursing home charts with the ADP
organizational data description requirement referenced in Sec.
424.516(g)(1)(iv) such that only one chart encompassing all this
information will be required.
Comment: Several commenters stated that CMS should require the
nursing facility to disclose organizations in which it has an ownership
or managerial interest.
Response: Neither section 1124(a) nor 1124(c) of the Act require a
nursing home to disclose entities in which it has an ownership or
managerial interest. However, some of this data may be reported via the
organizational charts or through more indirect means. To illustrate the
latter, suppose Provider X owns 50 percent of Provider Y. Provider Z
owns the other 50 percent of Provider Y as well as 75 percent of
Provider X. All three providers are enrolling in Medicare. Here--
<bullet> Z would not have to report on its Form CMS-855A that it
owns X and Y. Yet CMS would still receive this data when X and Y report
that they are owned by Z.
<bullet> Neither X nor Y would need to disclose that their owner,
Z, also owns another Medicare provider. Again, however, X and Y will
report that they are owned by Provider Z.
With this data, PECOS can ascertain the providers that Z owns and
how X and Y are related through this common ownership (for example,
what percentage of X and Y that Z owns). In sum, even though certain
information the commenters identify is not directly reported on a
particular facility's application, the facility's relationships with
other providers can be ascertained in PECOS due to the submission of
applications by these other providers. We therefore believe that much
of the data the commenters are requesting be submitted is already being
furnished. To the extent it is not, we believe that the requirement to
furnish data (including organizational structures) on ADPs will help
close some gaps in nursing home information. CMS will make information
collected on facility relationships per section 1124(c) accessible to
the public in a clear manner.
Comment: A commenter stated that the description of relationships
between ADPs and facilities: (1) must include information that clearly
outlines the ownership structure of each disclosed entity, the exchange
of any goods or services between each entity and the facility, the flow
of payments between each entity and the facility, and any and all
related party relationships; and (2) should be provided via a graphical
diagram that allows stakeholders to easily understand each ADP's
organizational structure and the various relationships among the
disclosed parties and the facility (including the parent/subsidiary
hierarchy of all direct and indirect owners, any related party
relationships, and any private equity involvement). The commenter added
that the facility should regularly update these diagrams and post them
on a public website. Another commenter stated that for disclosed
related organizations, the facility should also have to report (1)
total payments to the related organization; and (2) costs incurred by
the related organization to provide services to the nursing facility.
An additional commenter stated that CMS should require nursing
facilities to disclose their debt in comparison to the total market
value of their property and assets.
Response: We agree that: (1) the ownership structure of each
disclosed entity must be clearly outlined; (2) this data would be
ideally via a comprehensive and understandable diagram; and (3) the
data must be updated within the applicable timeframes specified in
Sec. 424.516. However, we do not believe that data regarding debt, the
exchange of goods/services, payment flow, and payments to or costs
incurred by related organizations must be reported as part of the
section 1124(c) of the Act disclosure process. We do not believe
sections 1124(a) and (c) of the Act authorize the collection of this
information, we did not propose to require its reporting, and we are
concerned in any event about the burden this data submission could pose
on the nursing homes.
Comment: Several commenters recommended that CMS require the
disclosure of individuals and entities with 5 percent or greater
ownership in the parent company.
Response: As noted, section 1124(a) of the Act requires the
reporting of the provider's direct or indirect owners as opposed to 5
percent owners of the nursing facility's parent company. Thus, we do
not believe section 1124(a) of the Act (or, for that matter, section
1124(c) of the Act) permits us to collect all of a parent company's
owners regardless of whether they have a 5 percent or greater indirect
ownership interest in the facility. However, depending on the number of
ownership layers and
[[Page 80159]]
indirect owners the facility has, there are situations where the parent
company's owners are indeed reported because they meet the
aforementioned 5 percent indirect ownership threshold.
Comment: Several commenters recommended that CMS require the
submission of an organizational diagram: (1) identifying all the
companies the nursing facility's parent organization controls; and (2)
that explains how these entities are related to each other.
Response: Neither section 1124(a) nor 1124(c) of the Act explicitly
requires the disclosure of all entities the provider's parent company
controls, owns, manages, or is related to. Nonetheless, and as already
explained, some of this data is already captured via the Form CMS-855A
data and the organizational charts. (For example, if the provider lists
all its 5 percent direct and indirect owners up to the parent company
on the Form CMS-855A, the intermediate organizations between the parent
and the provider--and in which the parent has an ownership interest--
will be reflected.)
Comment: Many commenters stated that facilities should include
supporting documentation with their disclosures to verify said data,
such as documents that confirm financial or managing control. To this
end, several commenters requested that CMS require the facility to
submit: (1) copies of articles of incorporation and bylaws; (2)
management, property, loan, mortgage, organizational, employment, and
other types of agreements, contracts, etc.; and (3) copies of documents
that clarify the relationship between the facility and any disclosed
person or entity. The commenters believed such documents will help CMS
confirm the submitted data's accuracy.
Response: We intend to validate section 1124(c) data to the fullest
extent feasible. As already mentioned, CMS under 42 CFR
424.510(d)(2)(ii) is authorized to require the submission of
documentation that helps confirm details regarding the provider's
ownership. Our sub-regulatory guidance will identify the types of
supporting documents that nursing homes may be required to submit, some
of which may fall within the categories the commenters suggested.
Comment: Several commenters stated that CMS should require the
nursing facility to disclose details of any lease agreement it has with
its lessor/landlord. This should include: (1) how many and which other
nursing homes are included under the lease; and (2) other lease terms
that may have substantial financial implications for the nursing
facility.
Response: We appreciate this suggestion. To the extent necessary to
validate data the facility has submitted (for example, ADP lessor
information under section 1124(c)(5)(A)(ii) of the Act), we may
consider requiring a copy of the lease agreement.
9. PECs and REITs
Comment: Many commenters supported: (1) the disclosure of PEC and
REIT data on the Form CMS-855A application; and (2) the inclusion of
publicly traded firms within the PEC definition.
Response: We appreciate the commenters' support.
Comment: Several commenters opposed the collection of PEC and REIT
data. A commenter stated that, according to some reports, there are no
statistically significant differences between PEC-owned nursing
facilities and non-PEC-owned nursing facilities in the areas of: (1)
staffing levels; (2) COVID-19 cases or deaths; or (3) deaths from any
cause.
Response: We respectfully disagree with these commenters. We noted
in the proposed rule and this final rule that we have seen reports that
raise concerns about the quality of care in PEC-owned and REIT-owned
nursing homes. One such report, issued by the National Bureau of
Economic Research, estimated that PEC ownership ``increases the short-
term mortality of Medicare patients by 10%.'' \17\ We believe these and
other studies, combined with our obligation to protect Medicare
beneficiaries, justify our efforts to gather PEC and REIT data so that
we can examine the extent to which these entities' ownership of
facilities impacts patient care.
---------------------------------------------------------------------------
\17\ Atul Gupta, Sabrina T. Howell, Constantine Yannelis, and
Abhinav Gupta, Does Private Equity Investment in Healthcare Benefit
Patients? Evidence from Nursing Homes, 2021, p. i.
---------------------------------------------------------------------------
Comment: A commenter stated that the PEC definition should include
any PEC with any ownership interest in a nursing facility no matter how
the PEC has titled itself.
Response: We concur with this commenter. It is important that any
such entity--irrespective of whether it owns a majority or minority
interest in the nursing home--be disclosed if the applicable ownership
reporting thresholds (for example, 5 percent) are met so that CMS and
stakeholders can understand the full scope of the nursing home's
ownership structure. We also do not believe the question of whether an
organization qualifies as a PEC for disclosure purposes should be
determined by its title; the test, rather, is whether the entity meets
the PEC definition.
Comment: A commenter stated that CMS should not create its own PEC
definition (which the commenter believed was inaccurate and too broad)
but should instead use the existing definition of ``private equity
fund'' utilized by other regulatory agencies, including the Securities
and Exchange Commission (SEC).
Response: We respectfully disagree. In establishing our PEC
definition, we considered several regulatory and non-regulatory
descriptions of such companies. The definition was intended to be
sufficiently expansive so as to collect a wide volume of these
entities. In our view, only by promulgating a broad definition, rather
than a restrictive one, can we capture the universe of organizations
needed to help us assess the extent of private equity involvement among
nursing homes.
Comment: Commenters contended that our PEC definition improperly
includes entities that are not private companies. A commenter did not
believe that information about public entities aligns with CMS' intent
and that CMS' main interest was in private organizations. The commenter
recommended that the PEC definition be revised to read, ``for purposes
of this subpart only, a publicly-traded or non-publicly-traded company
that collects capital investments from individuals or entities and
purchased [a majority ownership share of]/[a controlling interest in] a
provider.''
Response: While we appreciate this comment, we do not believe our
proposed PEC definition can be interpreted to include governmental
entities (which we believe the commenter was referencing when
discussing ``public entities''). In our view, the definition clearly
only includes private entities, whether publicly traded or not. We also
respectfully do not favor limiting PEC disclosure to those PECs with
majority ownership of the nursing facility. We cannot obtain a full
understanding of the prevalence of PECs in the nursing home sector
without collecting data on all PECs that meet our definition thereof,
regardless of whether the ownership interest is majority or minority.
Comment: A commenter stated that the proposed PEC definition: (1)
does not fully capture private equity involvement in facilities and
their chain organizations and parent companies; and (2) applies only to
owners or managers of the facility, which is not
[[Page 80160]]
necessarily how private equity structures its involvement in
facilities. To secure more thorough PEC data, the commenter (as well as
others) stated that CMS should expand the ADP definition to include
private equity ownership and control of nursing homes.
Response: We note several things. First, and as previously
explained, data regarding a nursing home's chain home office and parent
companies, will, with isolated exceptions, be reported to CMS.
(Exceptions could include parent companies with less than 5 percent
indirect ownership of the provider.) For each of these reported
entities, the facility will have to disclose whether that organization
is a PEC. To illustrate, assume 6 nursing homes are in a chain. All are
enrolling in Medicare and must disclose whether a reported entity is a
PEC. PECOS will be able to identify these 6 as part of a chain and,
equally important, indicate whether a PEC owns these facilities.
Therefore, we believe this will alleviate concerns that PEC involvement
in a chain (and the degree of said involvement) will not be revealed.
Second, the PEC disclosure requirement is not limited to owning and
managing entities of the provider. It includes all entities reported
per section 1124(a) and (c) of the Act, some of which may be, for
example, lessors of real property per section 1124(c)(5)(A)(ii) of the
Act. Third, and as mentioned, section 1124(c) of the Act contains no
provision authorizing the Secretary to include additional parties
within the ADP definition. Nevertheless, nursing facilities will still
have to submit the organizational charts currently required per the
Form CMS-855A, which will help identify the ownership relationships of
entities that are PECs.
Comment: Commenters suggested that CMS revise its proposed PEC
definition. A PEC, according to the commenters, should be defined as a
publicly-traded or non-publicly traded company that collects capital
investments from individuals or entities and purchases an ownership
share of: (1) a provider; (2) the real estate or buildings on or in
which a provider operates; (3) a company with an ownership or control
interest in a provider; or (4) an ADP. They further stated that CMS'
proposed definition has two drawbacks. One is that it lacks adequate
specificity to capture actual private equity investment, partly because
there is no legal term for private equity. The second is that it is too
narrow and focuses only on the provider rather than taking into account
complex ownership structures.
Response: We believe our definition is clear enough to alert
nursing homes of the types of entities that must be disclosed as PECs.
We disagree that the definition is too narrow. As previously explained,
we consider it to be reasonably broad in terms of the companies that
fall within its purview.
On the other hand, we recognize the commenters' concerns that the
proposed definition could be read to only apply to PEC interests in the
provider rather than, for instance, PEC interests in one of the
provider's indirect owners. As an illustration, assume Nursing Home W
is 75 percent owned by Entity X, which is 75 percent owned by Entity Y.
Entity Z, a PEC, owns 90 percent of Entity Y. Although Entity Z would
have to be disclosed as a 5 percent or greater indirect owner of the
nursing facility, it would not qualify as a PEC for Form CMS-855A
reporting purposes because its capital investment is in Entity Y
instead of the provider/nursing home. This could inhibit our ability to
assess the amount of PEC involvement among a provider's indirect
owners. We emphasize that we proposed our PEC definition with the
intention of collecting both direct and indirect PEC ownership
interests in the provider. We never meant to exclude indirect
interests. To clarify this for the public, we will insert ``direct or
interest'' before ``ownership share'' in our final PEC definition. We
do not view this as an expansion of the data we proposed because we had
always intended to require PEC data from indirect owners. We appreciate
the commenters' other suggested revisions, and we will consider them
for future rulemaking.
Comment: Commenters recommended changing our proposed REIT
definition to that of an entity that meets the definition of REIT in 26
U.S.C. 856 or that claims REIT status when filing taxes with the
Internal Revenue Service (IRS). The commenters stated that: (1) REIT is
a legal term recognized by the IRS; and (2) CMS' proposed definition
does not reference this legal definition but instead captures many
companies that own the real estate or building in or on which a
provider operates (or owns or operates the provider itself) but are not
REITs. With so all-encompassing a definition, CMS will be unable to
identify actual REITs. Commenters also recommended establishing
definitions that differentiate between publicly offered and non-
publicly offered REITs.
Response: The commenters' recommendation to adopt an alternative
REIT definition of REIT differs from the earlier recommendation to
adopt a different PEC definition in two ways. First, some of the
suggested PEC definition revisions could entail a significant increase
in the number of entities that would qualify as PECs and, in turn,
would have to be reported as such. The section 856 definition, on the
other hand, would be narrower than the REIT definition we proposed, as
the commenters indicated when noting that the proposed definition would
capture numerous entities that are not REITs. This means that fewer
organizations would be reported as REITs, hence potentially reducing
the burden on nursing homes, although this definition will still
capture entities that should appropriately be reported as REITs.
Second, there is no uniform, standard, widely accepted definition of
``private equity company'' in our federal regulations. Such is not so
with the section 856 REIT definition, which is broadly acknowledged
throughout the public and private sectors and, accordingly, could help
facilitate the reporting of consistent REIT data. For these two reasons
(as well as for the reasons the commenters outlined), we concur with
the recommendation that the section 856 definition should be utilized
instead of the proposed REIT definition. We will update this final rule
to include the former.
As for the recommendation to establish definitions to distinguish
between publicly-offered and non-publicly offered REITs, we are not at
this time focused on such differences for Medicare provider enrollment
purposes.
Comment: A commenter offered several recommendations regarding our
REIT proposal. First, the commenter stated that CMS should adopt the
definition of ``publicly offered REIT'' in 26 U.S.C. 562 and require
said entity to designate whether it is a publicly offered REIT. Second,
the commenter suggested that our proposed REIT definition be revised to
mean an entity that: (1) reported itself as a REIT for its last tax
return and continues to qualify as such under section 856; or (2) has
not filed its first tax return but has stated its intention to identify
itself as a REIT on its tax return to its owners and effectuates it
stated intention. Third, the commenter urged CMS to clarify that an
entity that has elected to be taxed as a REIT should continue to be
categorized as such for ``organizational structure'' purposes.
Response: As stated, we are including within this final rule the
REIT definition used in section 856, which we believe addresses the
commenter's second suggestion. We also previously noted section 562's
definition of publicly offered REIT, which is referenced in 26 U.S.C.
856(c)(5)(L)(i). If the commenter is suggesting that we include
[[Page 80161]]
checkboxes on the Form CMS-855A to distinguish between publicly offered
REITs and non-publicly offered REITs, we may consider this as a future
enhancement to the application. Regarding the commenter's third
recommendation, we interpret this as a request to add REITs to our
organizational structure definition. We appreciate this suggestion and
may contemplate it for future rulemaking.
Comment: While recommending adoption of the section 856 REIT
definition, a commenter stated that REIT disclosure should only be
required if the REIT: (1) leases or subleases real property to the
provider in the ordinary course of its business; and (2) has the power
to exert OFMC over the provider or a part thereof. Another commenter
agreed that the second criterion regarding OFMC should be a
prerequisite for REIT disclosure.
Response: While we concur that the REIT definition should mirror
that in section 856, we respectfully disagree that disclosure should be
restricted to REITs that meet the two recommended criteria. The central
issue is not whether a particular transaction was done in the ordinary
business course or the degree of the REIT's control over the provider.
The main issue is whether it meets the section 856 definition. Indeed,
REITs often merely own or lease the land on which the provider is
located and do not own or operate the facility.
Comment: A commenter stated that, in addition to REIT data, CMS
should collect information on non-profit or public entities that
purchase nursing facility real estate but may not qualify as REITs. The
commenter stated that these entities, like for-profit organizations,
engage in such practices.
Response: We appreciate this suggestion and may consider it for
future policy development.
Comment: A commenter stated that CMS should exempt non-profit,
hospital-based providers (NPHBPs) that operate nursing facilities from
the PEC disclosure requirements (or, at a minimum, add a checkbox to
the Form CMS-855A to capture NPHBP ownership to distinguish NPHBPs from
PECs). The commenter stated that NPHBPs (being hospital-based) are
subject to stricter oversight and regulations than private equity
firms. Excluding NPHBPs as described would reduce the reporting burden
on these entities.
Response: We respectfully disagree. Exempting certain types of
nursing facilities from PEC disclosure could leave CMS, stakeholders,
and beneficiaries with an incomplete understanding of the scope of PEC
prevalence in the nursing home sector. Concerning the suggested
checkbox, an enrolling nursing home must already disclose any non-
profit status in Section 2 of the Form CMS-855A; furthermore, any
association with a hospital (such as ownership or management) is
reported in Section 5 of the Form CMS-855A. We thus do not believe the
recommended checkbox is necessary.
Comment: Several commenters recommended that CMS continue
investigating private equity's involvement in health care facilities.
Response: We agree with this commenter and intend to continue our
efforts to examine the role and scope of PEC involvement in the health
care sector.
10. Miscellaneous Comments
Comment: A commenter stated that CMS should: (1) require nursing
homes to place signs at their entrances stating their ownership type
and for-profit/non-profit status; and (2) create a registry outlining
each nursing home's status concerning national nurse and doctor
staffing standards.
Response: Although we respectfully believe these comments are
outside the scope of this rule, we appreciate all suggestions from
stakeholders regarding means of (1) facilitating transparency
concerning nursing home ownership and operations and (2) improving the
quality of nursing home care.
Comment: A commenter encouraged CMS to consult with industry
experts regarding the proposed rule. These parties should include: (1)
unions representing nursing home employees; (2) academics who research
nursing homes; and (3) organizations that advocate for the elderly.
Other commenters stated that CMS should seek input from stakeholders
when developing plans for publishing the section 1124(c) data and when
crafting the sub-regulatory guidance related to this rule.
Response: We received feedback from some of the parties the
commenter references during the 60-day notice-and-comment period and,
as with all the comments we received, both appreciated and considered
them. After the final rule is issued, CMS will remain open to feedback
from stakeholders regarding section 1124(c)'s implementation, the
publication of the section 1124(c) data, and our sub-regulatory
guidance.
Comment: A commenter urged CMS to expand the section 1124(c)
reporting requirements to include additional provider/supplier types,
such as physician practices, hospitals, and dialysis facilities.
Response: While we appreciate this comment, section 1124(c) of the
Act is limited to nursing homes. Therefore, we believe we lack the
statutory authority to include other provider/supplier types within
section 1124(c)'s purview.
Comment: Several commenters expressed concern that CMS and certain
states allow nursing home ownership changes a- --with Medicare changes
of ownership under Sec. 489.- --transfer of a provider agreement with
little scrutiny of the new owner. They recommended that CMS: (1)
establish or strengthen requirements for changes of ownership or
management of nursing homes; and (2) identify owners with a potential
for (or actual history of) furnishing poor care or participating in
fraud and disqualify them from Medicare or Medicaid participation. They
added that these requirements should extend to current owners and
managers of nursing homes (not simply new ones) and that these parties
should be removed or suspended from Medicare if they engage in such
conduct.
Response: We appreciate these comments but believe they are outside
the scope of this rule.
Comment: A commenter recommended that a centralized Medicaid
provider enrollment application system be created to better coordinate
information across states and reduce duplication.
Response: We appreciate this recommendation but believe it is
outside the scope of this rule.
Comment: Several commenters requested clarification as to how the
section 1124(c) data collection will help improve the quality of
nursing home care.
Response: We believe the section 1124(c) information will help
enhance nursing home quality by enabling CMS, states, and stakeholders
to examine the entire scope of the facility's organizational,
operational, and managerial structure, including its relationships with
other entities (for instance, consulting firms). With this more
complete picture--and in conjunction with quality-of-care data such as
survey results--CMS, states, and stakeholders will be better positioned
to ascertain areas of the facility's operations that could be sources
of sub-standard quality and, to the extent applicable, undertake
remedial measures or otherwise hold the facilities accountable.
Furthermore, public disclosure of the section 1124(c) data will allow
beneficiaries, their families, and other parties to identify which
nursing homes may be best suited to provide quality care. This, in
turn, could spur nursing homes to improve
[[Page 80162]]
the quality of their services so as to become a more desirable choice
for beneficiaries.
Comment: Several commenters stated that CMS should assign a
personal identification number to an individual with an ownership or
management interest in a nursing home.
Response: We appreciate this suggestion, but we do not believe the
personal identification numbers the commenters cite are necessary.
Providers must currently report identifying data about their owners and
managers, such as their legal business name, doing business name,
address, etc. This allows us to track such parties in PECOS, including
their ownership or management of other enrolled providers and
suppliers. (We will also require identifying information regarding the
parties reported per section 1124(c) of the Act.) We believe this
identifying data largely serve the same purpose as a personal
identification number.
Comment: Several commenters requested that CMS explain how it will
use section 1124(c) data disclosures in: (1) its Medicare enrollment
decisions; and (2) determining whether a potential owner requires
further investigation.
Response: Nursing homes will have to submit full and accurate
section 1124(c) data. If the facility does not, its enrollment may, as
applicable, be denied, revoked, or deactivated, or its application
rejected. Reported parties will be reviewed against the OIG exclusion
list, too. Newly reported SNF owners will be scrutinized (and, as
applicable, subject to further review) consistent with our current
procedures, such as requiring the submission of fingerprints.
Comment: Several commenters stated that CMS should implement in the
final rule section 1124(c)(2)(B) of the Act, which permits non-profit
nursing homes to submit the IRS Form 990 to the extent that the
information thereon meets the section 1124(c) disclosure requirements.
A commenter explained that the Form 990 discloses governance and
operational leadership, related parties and affiliates, level of
control and ownership, key employees and independent contractors, and
other detailed information. The commenter stated CMS should promptly
establish procedures for submitting Form 990 data in lieu of its
duplicate disclosure via the Form CMS-855A.
Response: As we noted in the proposed rule, CMS is exploring the
operational complexities involved in implementing section 1124(c)(5) of
the Act. We may address this matter in future rulemaking.
Comment: Several commenters recommended that CMS prohibit a party
from: (1) acquiring 5 percent or more ownership of a nursing facility
(or management company under contract therewith); or (2) becoming an
officer, director, or general partner in a SNF or contracted management
company without written CMS approval at least 90 days before the
transaction.
Response: We appreciate this recommendation but believe it is
outside the scope of this rule.
Comment: A commenter stated that CMS should: (1) collect data that
assesses the labor-related impacts of consolidation in health care and
how changes to the labor market affect patient care; and (2) release
data to help stakeholders better understand how mergers and
acquisitions can lead to anti-competitive and harmful practices (for
example, reduced wages and/or non-cash benefits).
Response: We appreciate this comment but believe it is outside the
scope of this final rule. However, with the additional information
collected as part of this rule, we hope to better elucidate how
consolidation and certain ownership structures may be affecting the
health care labor market and quality of care.
Comment: A commenter stated that CMS should prohibit ``squatting'',
which the commenter described as when a party acquires, operates,
establishes, manages, conducts, or maintains a nursing facility before
CMS has approved its enrollment application. The commenter contended
that should a party obtain such an interest in a nursing facility
without first obtaining a state license, CMS should take immediate
action, including a: (1) ban on new admissions; and (2) suspension of
all Medicare and Medicaid payments to the facility.
Response: We appreciate this comment but believe it is outside the
scope of this final rule.
Comment: Several commenters noted that section 1124(c)(1) of the
Act requires the ``identity of and information on'' the parties
disclosed under section 1124(c)(2)(A)(ii) of the Act. They stated that
CMS should use this authority to collect data other than names, titles,
and dates of service. A commenter explained that disclosure of a
person's name by itself may not adequately identify that individual.
Response: We recognize that requiring data beyond the party's name
and title (such as an address) may be necessary to confirm
identification. Any such data elements will, if required, be added to
the Form CMS-855A via the Paperwork Reduction Act process and be
subject to prior public notice-and-comment.
Comment: Several commenters recommended the creation of an
interagency task force to identify trends in nursing home transparency
and monitor nursing homes that require particular scrutiny. This group,
the commenters stated, should include Justice Department and Labor
Department staff to provide guidance on mechanisms for: (1) enforcing
the final rule's provisions; and (2) improving patient care.
Response: We appreciate this suggestion and note that we
communicate with other government agencies regarding nursing home
program integrity, quality, and transparency issues. We will continue
to do so during and after section 1124(c)'s implementation.
Comment: Several commenters urged CMS to implement the GAO's
recommendations in its January 2023 report titled, ``CMS Should Make
Ownership Information More Transparent for Consumers.'' \18\ In that
report, the GAO found that ownership information on Care Compare was
insufficiently transparent for consumers.\19\ Its recommendations
included but were not limited to: (1) using plain language to define
key terms in Care Compare's ownership section; and (2) organizing
ownership information by providing consumers easy access to a list of
all facilities under common ownership.\20\
---------------------------------------------------------------------------
\18\ GAO-23-104813.
\19\ Ibid., p. 18.
\20\ Ibid., p. 25.
---------------------------------------------------------------------------
Response: We believe these comments are outside the scope of this
final rule because our proposals were unrelated to the format of the
current Care Compare website. However, as announced on June 28, 2023,
ownership and operatorship affiliation information is now available on
the Nursing Home Care Compare website in a clear, accessible, and
easily readable format for consumers (<a href="https://www.cms.gov/files/document/qso-23-18-nh.pdf">https://www.cms.gov/files/document/qso-23-18-nh.pdf</a>).
B. Public Comments Received on the FY 2024 IPPS/LTCH PPS Proposed Rule
Comment: Several commenters supported our proposed PEC and REIT
definitions, the collection of PEC and REIT data, and the application
of these definitions to all providers and suppliers that complete the
Form CMS-855A.
Response: We appreciate the commenters' support.
Comment: Several commenters recommended that CMS furnish
[[Page 80163]]
scenarios regarding when and how PEC and REIT ownership and
relationships would be reported. They cited an example of a provider
with a long-term building lease with a county to operate a hospital and
questioned whether this would qualify as a REIT relationship.
Response: CMS in its sub-regulatory guidance will provide guidance
on the requirements for reporting PEC and REIT data, including
situations similar to the commenter's example.
Comment: Several commenters opposed the collection of PEC data from
providers and suppliers other than SNFs. A commenter stated that PEC
ownership does not inherently indicate lesser levels of care than other
types of ownership, while another commenter stated that the proposed
rule cited no evidence that PEC-owned hospitals needed closer
monitoring. At a minimum, a commenter recommended that CMS explain how:
(1) it will determine if a connection exists between quality and
ownership type for non-SNF providers and suppliers; and (2) quality is
impacted if the requested data show that such a connection exists.
Another commenter stated that the request for PEC data impugns private
equity owners.
Response: We cited in the aforementioned February 15, 2023 proposed
rule several studies that expressed concern regarding the quality of
care furnished at PEC-owned SNFs. Although those studies were
restricted to SNFs, we explained in the FY 2024 IPPS/LTCH PPS proposed
rule that the studies raised legitimate concerns that similar problems
might exist with PEC ownership of other provider and supplier types,
hence the need to collect PEC data on the latter across the healthcare
industry. Concerning the commenter's recommendation, and as previously
explained, the furnishing of PEC data will help CMS determine: (1) the
prevalence of PEC involvement within the Medicare provider or supplier
universe; and (2) the extent to which (and in what aspects) patient
care is deleteriously impacted. That is, our objective is not to
disparage PECs but to ascertain the degree and impact of PEC ownership
of providers and suppliers.
Regarding our proposed PEC definition, we previously noted that we
considered several other regulatory and non-regulatory descriptions of
PECs with the goal of establishing a definition that could capture a
wide volume of such organizations; this will help us ascertain the
degree of PEC involvement among Medicare providers and suppliers. We
believe our proposed definition (aside from the aforementioned minor
clarification thereto that we are finalizing) fulfills this objective.
Comment: Several commenters opposed the collection of REIT data.
They stated that: (1) CMS furnished no proof that REIT ownership leads
to substandard care; and (2) REITs have only limited involvement in the
health care arena.
Response: We noted in the February 15, 2023 proposed rule that REIT
ownership of nursing homes has generated concerns akin to those
involving PEC-owned nursing facilities. We acknowledge that these
concerns pertained to REIT-owned nursing homes as opposed to, for
example, hospices that are owned by REITs. Yet it is precisely for this
reason that we need to know the prevalence of REIT involvement with
other Medicare provider and supplier types. Indeed, any quality-of-care
issues regarding REIT-owned nursing homes might also exist with respect
to non-SNF providers. Given our obligation to protect Medicare
beneficiaries, it is imperative to collect information that can assist
us in stemming any problems associated with certain types of ownership,
no matter the amount of involvement a particular ownership type may
have in the health care field.
Comment: Several commenters recommended that CMS not finalize its
proposed definition of REIT and instead adopt the REIT definition in 26
U.S.C. 856.
Response: As stated in our response to a similar comment on the
February 15, 2023 proposed rule, we agree with this suggestion and will
finalize the section 856 definition.
C. Final Provisions
We are finalizing all of our provisions from both the February 15,
2023 and FY 2024 IPPS/LTCH PPS final rules as proposed except as
follows:
<bullet> We are inserting ``direct or indirect'' before the term
``ownership share'' in our PEC definition in 42 CFR 424.502.
<bullet> We are redefining REIT in 42 CFR 424.502 as a real estate
investment trust as that term is described in 26 U.S.C. 856.
IV. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995, we are required to
provide 30-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that we solicit comment on the following issues:
<bullet> The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
<bullet> The accuracy of our estimate of the information collection
burden.
<bullet> The quality, utility, and clarity of the information to be
collected.
<bullet> Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
We sought public comment on each of these issues for the following
sections of this document that contain information collection
requirements (ICRs):
A. Background
As explained in section II. of this final rule, we proposed to
implement most of section 1124(c) of the Act. Section 1124(c) of the
Act requires Medicare and Medicaid nursing facilities to report certain
information about their ownership and operators. This data include, but
is not limited to: (1) members of the facility's governing body; (2)
the facility's officers, directors, members, partners, trustees, and
managing employees; (3) parties that exercise operational, financial,
or managerial control over the facility or a part thereof; (4) parties
who lease or sublease real property to the facility, or own a whole or
part interest equal to or exceeding 5 percent of the total value of
such real property; and (5) parties that furnish management or
administrative services, management or clinical consulting services, or
accounting or financial services to the facility.
B. Nursing Home Submission of Section 1124(c) Data
1. Medicare
We noted in section II. of this final rule that the Form CMS-855A
(OMB Control No.: 0938-0685), which SNFs must complete to enroll in
Medicare, already collects much of the aforementioned information.
Examples of this data include the SNF's owners, managing employees,
corporate officers, corporate directors, and other parties. As part of
the enrollment process, the SNF is also currently required to submit
the previously referenced organizational charts. However, certain data
is not collected via the existing Form CMS-855A process, such as
parties that perform administrative, financial, or clinical consulting
services and do not qualify as another person or entity that is
otherwise required to be reported on the application (for example, a
managing employee or owner).
[[Page 80164]]
Disclosure of this heretofore non-mandatory information (hereafter
referenced as ``supplemental data'') will constitute additional ICR
burden to the SNF community.
There will be three principal types of Form CMS-855A transactions
via which SNFs will report supplemental data: (1) applications to
initially enroll in Medicare (which, for purposes of the reporting
requirements in proposed Sec. 424.516(g), will include changes of
ownership under 42 CFR 489.18); (2) applications to revalidate the
SNF's current enrollment information per Sec. 424.515; and (3)
reporting changes to any of the SNF's previously disclosed supplemental
data per proposed Sec. 424.516(g).
Form CMS-855A applications are typically completed by the
provider's office staff. However, given the potential complexity of the
supplemental data to be reported, it is possible that the SNF's legal
counsel will be involved in reviewing this information. Accordingly, we
will use the following categories and hourly wage rates from the U.S.
Bureau of Labor Statistics' (BLS) May 2022 National Occupational
Employment and Wage Estimates for all salary estimates (<a href="https://www.bls.gov/oes/current/oes_nat.htm">https://www.bls.gov/oes/current/oes_nat.htm</a>):
Table 1--National Occupational Employment and Wage Estimates
----------------------------------------------------------------------------------------------------------------
Fringe
Occupation Mean hourly benefits and Adjusted
Occupation title code wage ($/hr) overhead ($/ hourly wage ($/
hr) hr)
----------------------------------------------------------------------------------------------------------------
Office and Administrative Support Workers, All 43-9199 20.75 20.75 41.50
Other..........................................
Lawyers......................................... 23-1011 78.74 78.74 157.48
----------------------------------------------------------------------------------------------------------------
Based on our internal data, and as stated in the proposed rule, we
estimate that each year approximately: (1) 1,055 SNFs will submit an
initial Form CMS-855A enrollment application (excluding Form CMS-855A
change of ownership applications under Sec. 489.18); (2) 1,672 will
submit a Form CMS-855A revalidation application; (3) 951 will submit a
Form CMS-855A change of ownership application; and (4) 4,500 will
report new or changed supplemental data via a Form CMS-855A change of
information application. Furthermore, we project that it will take the
SNF an average of 2.25 hours to furnish the supplemental data for
initial, revalidation, and change of ownership applications and 1 hour
for changes of information. (We recognize that the actual time for a
particular SNF may be more or less than these figures.) Of these hour
estimates, we project that the burden will be split evenly between the
SNF's administrative staff and legal counsel (for example, 1.125 hours
each for initial and revalidation applications). With this equal
division, the per hour wage will be $99.49 (($41.50 + $157.48)/2). (The
figure in the proposed rule was $91.64 (($40.94 + $142.34)/2), which
was based on the May 2021 BLS wage figures.) As outlined in more detail
in Table 2, this results in a projected annual ICR burden of our
Medicare SNF disclosure provisions of 12,776 hours at a cost of
$1,271,084. (Using the May 2021 BLS wage figures, our estimate in the
proposed rule was $1,170,793.)
2. Medicaid
We mentioned in section II. of this final rule that states have
considerable discretion in the operational aspects of their Medicaid
programs, including with respect to provider enrollment. Concerning our
requirements regarding nursing home data, some states may already
collect all of this information, the majority of it, or only a modest
portion of it. This means that the number of projected initial and
revalidation applications newly reporting this information, as well as
the time it takes the facility to disclose the data, will likely vary
from state to state. Furthermore, we do not have readily available
information on the number of Medicaid nursing facility initial and
revalidation applications that are submitted to each state each year.
Notwithstanding these uncertainties, we believe that reasonable
estimates of the hour and cost burdens are possible.
The number of Medicaid-enrolled nursing facilities nationwide is
comparable to that for Medicare-enrolled SNFs: roughly between 15,000
and 15,500. In light of this, we believe the Medicare application
estimates we used in section III.B. of the final rule for initial and
revalidation applications can also be used for our proposed Medicaid
provisions. (We took a similar approach when establishing our Medicaid
application projections in the proposed rule.) Consequently, and as
indicated in Table 2, we estimate an annual ICR burden for these
provisions of 6,136 hours and $610,470. (Using the May 2021 BLS wage
figures, our estimate in the proposed rule was $562,303. We solicited
public comments on the accuracy of this projection.)
3. Total
Given the foregoing, and as outlined in the following table, we
project an annual total ICR burden associated with our SNF disclosure
provisions of 18,912 hours and $1,881,554. (Our estimate in the
proposed rule was $1,733,096, which, again, was due to our use therein
of the May 2021 BLS wage figures.)
Table 2--Hour and Burden Estimates for Nursing Home Disclosure Provisions
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hourly labor
cost of
OMB control Number of Number of Burden per Total annual reporting ($)
No. respondents responses response burden (hours) (includes 100% Total cost ($)
(hours) fringe
benefits) *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Medicare
--------------------------------------------------------------------------------------------------------------------------------------------------------
Initial Form CMS-855A Applications...... 0938-0685 1,055 1,055 2.25 2,374 99.49 236,189
[[Page 80165]]
Form CMS-855A Revalidation Applications. 0938-0685 1,672 1,672 2.25 3,762 99.49 374,281
Form CMS-855A Change of Ownership 0938-0685 951 951 2.25 2,140 99.49 212,909
Applications...........................
Form CMS-855A Change of Information 0938-0685 4,500 4,500 1 4,500 99.49 447,705
Applications...........................
---------------------------------------------------------------------------------------------------------------
Medicare Totals..................... N/A 8,178 8,178 N/A 12,776 N/A 1,271,084
--------------------------------------------------------------------------------------------------------------------------------------------------------
Medicaid
--------------------------------------------------------------------------------------------------------------------------------------------------------
Initial Application..................... N/A 1,055 1,055 2.25 2,374 99.49 236,189
Revalidation Application................ N/A 1,672 1,672 2.25 3,762 99.49 374,281
---------------------------------------------------------------------------------------------------------------
Medicaid Totals..................... N/A 2,727 2,727 N/A 6,136 N/A 610,470
---------------------------------------------------------------------------------------------------------------
Totals.......................... N/A 10,905 10,905 N/A 18,912 N/A 1,881,554
--------------------------------------------------------------------------------------------------------------------------------------------------------
C. ICRs for Reporting of PEC and REIT Data
As previously explained in this final rule, we proposed in the FY
2024 IPPS/LTCH proposed rule that the PEC and REIT definitions we
proposed in the February 15, 2023 proposed rule apply to all providers
and suppliers completing the Form CMS-855A enrollment application (OMB
Control No. 0938-0685)), not merely SNFs. This was consistent with our
proposal on December 15, 2022 to revise the Form CMS-855A application
in a Paperwork Reduction Act submission (87 FR 76626) to require all
owning and managing entities listed on any provider's or supplier's
Form CMS-855A submission to disclose whether they are a PEC or a
REIT.\21\
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\21\ <a href="https://www.cms.gov/regulations-and-guidance/legislation/paperworkreductionactof1995/pra-listing/cms-855a">https://www.cms.gov/regulations-and-guidance/legislation/paperworkreductionactof1995/pra-listing/cms-855a</a>.
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There will be five types of Form CMS-855A transactions via which we
believe providers and suppliers (including SNFs) would report PEC and
REIT data: (1) initial enrollment applications; (2) change of ownership
applications; (3) revalidation applications; (4) reactivation
applications; and (5) change of information applications. Form CMS-855A
applications are typically completed by the provider's or supplier's
office staff. Therefore, we will use the previously referenced BLS wage
estimate for ``Office and Administrative Support Workers, All Other.''
Table 3--National Occupational Employment and Wage Estimates
----------------------------------------------------------------------------------------------------------------
Fringe benefits
Occupation title Occupation code Mean hourly and overhead ($/ Adjusted hourly
wage ($/hr) hr) wage ($/hr)
----------------------------------------------------------------------------------------------------------------
Office and Administrative Support Workers, 43-9199 20.75 20.75 41.50
All Other..................................
----------------------------------------------------------------------------------------------------------------
Based on our internal data, and as we did in the FY 2024 IPPS/LTCH
PPS proposed rule, we estimate that the following number of Form CMS-
855A applications will be submitted reporting PEC or REIT data: (1)
6,462 initial applications; (2) 3,105 changes of ownership; (3) 3,133
revalidations; (4) 610 reactivations; and (5) 27,000 changes of
information. Furthermore, we project that it would take an average of
12 minutes to furnish the PEC and REIT data, though we recognize that
this will vary by Form CMS-855A transaction type and the amount of the
data the particular provider or supplier must disclose.
[[Page 80166]]
Table 4--Hour and Burden Estimates for PEC and REIT Provisions
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hourly labor
cost of
OMB control Number of Number of Burden per Total annual reporting ($)
No. respondents responses response burden (hours) (includes 100% Total cost ($)
(hours) fringe
benefits) *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Initial Form CMS-855A Applications...... 0938-0685 6,462 6,462 0.2 1,292 41.50 53,618
Form CMS-855A Change of Ownership....... 0938-0685 3,105 3,105 0.2 621 41.50 25,772
Form CMS-855A Revalidation Applications. 0938-0685 3,133 3,133 0.2 627 41.50 26,021
Form CMS-855A Reactivation Applications. 0938-0685 610 610 0.2 122 41.50 5,063
Form CMS-855A Change of Information 0938-0685 27,000 27,000 0.2 5,400 41.50 224,100
Applications...........................
---------------------------------------------------------------------------------------------------------------
Totals.............................. N/A 40,310 40,310 N/A 8,062 41.50 334,574
--------------------------------------------------------------------------------------------------------------------------------------------------------
D. Totals
Given the foregoing, we estimate that the combined burden of our
section 1124(c) of the Act and PEC/REIT disclosure requirements is
26,974 hours and $2,216,128.
We received no comments on our proposed ICR estimates for either
rule and are finalizing them as proposed with the exception of the
increased costs (described in the succeeding paragraphs) associated
with our use of the May 2022 BLS wage estimates.
V. Regulatory Impact Analysis
A. Statement of Need
This final rule is necessary so that CMS and states can obtain
important data about the owners and operators of nursing facilities.
This would better enable CMS and states to monitor the ownership and
management of these providers; this is an especially critical
consideration given documented quality issues and differences in
outcomes in nursing facilities with certain types of owners, such as
PECs. This rule is an important component of the Biden-Harris
Administration's initiative to improve nursing home safety, quality,
and accountability.\22\
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\22\ <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/02/28/fact-sheet-protecting-seniors-and-people-with-disabilities-by-improving-safety-and-quality-of-care-in-the-nations-nursing-homes/">https://www.whitehouse.gov/briefing-room/statements-releases/2022/02/28/fact-sheet-protecting-seniors-and-people-with-disabilities-by-improving-safety-and-quality-of-care-in-the-nations-nursing-homes/</a>.
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B. Overall Impact of Provisions of This Final Rule
1. Background
We have examined the impacts of this final rule, as required by
Executive Order 12866 on Regulatory Planning and Review (September 30,
1993), Executive Order 13563 on Improving Regulation and Regulatory
Review (January 18, 2011), the Regulatory Flexibility Act (RFA)
(September 19, 1980, Pub. L. 96-354), section 1102(b) of the Act,
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22,
1995, Pub. L. 104-4), Executive Order 13132 on Federalism (August 4,
1999), and Subtitle E of the Small Business Regulatory Enforcement
Fairness Act of 1996 (commonly known as the Congressional Review Act)
(5 U.S.C. 804(2)). This section of this final rule contains the impact
and other economic analyses for our proposed provisions.
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Section
3(f) of Executive Order 12866, as amended by Executive Order 14094
(Modernizing Regulatory Review), defines a ``significant regulatory
action'' as an action that is likely to result in a rule: (1) having an
annual effect on the economy of $200 million or more in any 1 year
(adjusted every 3 years by the Administrator of the Office of
Information and Regulatory Affairs (OIRA) for changes in gross domestic
product), or adversely affect in a material way the economy, a sector
of the economy, productivity, competition, jobs, the environment,
public health or safety, or State, local, territorial, or tribal
governments or communities; (2) creating a serious inconsistency or
otherwise interfering with an action taken or planned by another
agency; (3) materially altering the budgetary impacts of entitlement
grants, user fees, or loan programs or the rights and obligations of
recipients thereof; or (4) raising legal or policy issues for which
centralized review would meaningfully further the President's
priorities or the principles set forth in Executive Order 12866, as
specifically authorized in a timely manner by the Administrator of OIRA
in each case.
A regulatory impact analysis (RIA) must be prepared for rules with
significant regulatory action/s and/or with significant effects as per
section 3(f)(1) of $200 million or more in any 1 year. Based on our
estimates, OIRA has determined this rulemaking is not significant per
section 3(f)(1) of Executive Order 12866 and does not meet the
definition in 5 U.S.C. 804(2) (Congressional Review Act). Accordingly,
we have prepared a Regulatory Impact Analysis that to the best of our
ability presents the costs and benefits of the rulemaking.
C. Detailed Economic Analysis
1. Benefits
As discussed in section II. of this final rule, we believe the data
furnished in accordance with this rule will help CMS more closely
monitor the ownership and management of nursing facilities. This, in
conjunction with the Biden-Harris Administration's other initiatives,
could help improve beneficiary care, although these potential benefits
cannot be monetarily quantified.
2. Costs
The costs associated with the requirements of this final rule
involves nursing facilities' submission of the required information and
the regulatory review costs. We projected in section IV.
[[Page 80167]]
of this final rule that the annual burden on nursing facilities of
furnishing this data would be 26,974 hours and $2,216,128. Meanwhile,
the total cost of reviewing this final rule is $4,160,189.
If regulations impose administrative costs on private entities,
such as the time needed to read and interpret this final rule, we
should estimate the cost associated with regulatory review. Due to the
uncertainty involved with accurately quantifying the number of entities
that will be directly impacted and will review this final rule, we will
assume that roughly half the number of SNFs (or 7,770 out of the
aforementioned universe of 15,500) will review this rule. We
acknowledge that this assumption may understate or overstate the costs
of reviewing this rule.
For purposes of our estimate, we assume that the SNF's legal
counsel and the medical and health service manager will read the rule.
Using the BLS May 2022 mean wage information for medical and health
service managers (Code 11-9111) we estimate that the cost of reviewing
this final rule is $123.06 per hour, including overhead and fringe
benefits (<a href="https://www.bls.gov/oes/current/oes119111.htm">https://www.bls.gov/oes/current/oes119111.htm</a>). The mean
hourly wage for the SNF's lawyer (Code 23-1011) is $157.48. Assuming an
average reading speed of 250 words per minute, we estimate that it will
take approximately 114 minutes (1.91 hours) for the staff to review all
of this final rule, which contains a total of approximately 28,600
words. For each SNF that reviews the final rule, the estimated cost is
(1.91 x $123.06) + (1.91 x $157.48) or $545.42. Therefore, we estimate
that the total cost of reviewing this final rule is $4,160,189 ($535.42
x 7,770 SNFs).
3. Savings or Transfers
We do not anticipate any direct savings or transfers from our
provisions. This is principally because the provisions merely involve
the submission of data for CMS or state review.
D. Alternatives Considered
The principal alternative we considered and adopted was our
proposal that a SNF would not have to report the data referenced in
proposed Sec. 424.516(g) twice on the same Form CMS-855A submission:
once per section 1124(a) of the Act and again per section 1124(c) of
the Act. This was intended to alleviate the burden on the SNF
community, though we cannot quantify any resultant savings in monetary
terms. We did not consider other alternatives because of the statute's
clear mandate concerning the specific data to be reported.
E. Accounting Statement and Table
As required by OMB Circular A-4 (available at <a href="https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/circulars/A4/a-4.pdf">https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/circulars/A4/a-4.pdf</a>), we have prepared an accounting statement in
Table 5 showing the classification of the impact associated with the
provisions of this final rule.
Table 5--Accounting Statement: Estimated Annual Burden of Nursing Facility Disclosure Final Rule
----------------------------------------------------------------------------------------------------------------
Primary
Category estimate Year dollar Period covered
----------------------------------------------------------------------------------------------------------------
Annualized Monetized ICR Burden.............................. $2.22 2022 2022-2032
----------------------------------------------------------------------------------------------------------------
We did not receive comments on our regulatory impact analysis and
are finalizing the estimates described therein with the exception of
the increased costs (described in the succeeding paragraphs) associated
with our use of the May 2022 BLS wage estimates.
F. Regulatory Flexibility Act (RFA) Analysis
The RFA requires agencies to analyze options for regulatory relief
of small entities, if a rule has a significant impact on a substantial
number of small entities. For purposes of the RFA, we estimate that
SNFs are small entities as that term is used in the RFA (including
small businesses, nonprofit organizations, and small governmental
jurisdictions). The great majority of hospitals and most other health
care providers and suppliers (including nursing facilities) are small
entities, either by being nonprofit organizations or by meeting the
Small Business Administration (SBA) definition of a small business
having revenues of less than $14 million to $30 million in any 1 year
(for details, see the SBA's website at <a href="https://www.sba.gov/document/support-table-size-standards">https://www.sba.gov/document/support-table-size-standards</a> for the 62311 SNFs series). For purposes
of the RFA, most SNFs are considered small businesses according to the
SBA's size standards with total revenues of $30 million or less in any
1 year.
Individuals and states are not included in the definition of a
small entity. As its measure of significant economic impact on a
substantial number of small entities, HHS uses a change in revenue of
more than 3 to 5 percent. Given the: (1) fairly small number of
providers that would be affected by this rule when compared with the
over 2 million Medicare providers and suppliers; and (2) projected
costs we previously outlined, we do not believe this threshold would be
reached by the requirements of this final rule. Therefore, the
Secretary has certified that this final rule will not have a
significant economic impact on a substantial number of small entities.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 604 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a metropolitan
statistical area and has 100 or fewer beds. As this final rule will
only affect nursing facilities, it will not have a significant impact
on the operations of a substantial number of small rural hospitals.
G. Unfunded Mandates Reform Act Analysis
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2023, that
threshold level is currently approximately $177 million. Given the
aforementioned estimated costs, this final rule does not mandate any
requirements for State, local, or tribal governments, or for the
private sector.
H. Federalism Analysis
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a final rule that imposes
substantial direct costs on State and local governments, preempts State
law, or otherwise has federalism implications. We have
[[Page 80168]]
examined our final provisions in accordance with Executive Order 13132
and have determined that they will not have a substantial direct effect
on State, local or tribal governments, preempt State law, or otherwise
have a federalism implication.
Chiquita Brooks-LaSure, Administrator of the Centers for Medicare &
Medicaid Services, approved this document on November 8, 2023.
List of Subjects
42 CFR Part 424
Health facilities, Health professions, Medicare, Reporting and
recordkeeping requirements.
42 CFR Part 455
Grant programs--health, Health facilities, Medicaid, Program
integrity.
For the reasons stated in the preamble, the Centers for Medicare &
Medicaid Services amends 42 CFR chapter IV as follows:
PART 424--CONDITIONS FOR MEDICARE PAYMENT
0
1. The authority for part 424 continues to read as follows:
Authority: 42 U.S.C. 1302 and 1395hh.
Subpart P--Requirements for Establishing and Maintaining Medicare
Billing Privileges
0
2. Section 424.502 is amended by--
0
a. Adding the definition of ``Additional disclosable party'' in
alphabetical order;
0
b. Revising the definition of ``Managing employee''; and
0
c. Adding the definitions of ``Organizational structure'', ``Private
equity company'', and ``Real estate investment trust'' in alphabetical
order.
The additions and revision read as follows:
Sec. 424.502 Definitions.
* * * * *
Additional disclosable party means, with respect to a skilled
nursing facility defined at section 1819(a) of the Act, 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 skilled nursing facility
administrator and a hospice or skilled nursing facility medical
director.
(2) With respect to the additional requirements at Sec. 424.516(g)
for a skilled nursing facility defined at section 1819(a) of the Act,
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 skilled nursing
facility defined at section 1819(a) of the Act, 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
[…truncated; see source link]Indexed from Federal Register on November 17, 2023.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.