By: Christopher A. Parrella, Esq., CPC, CHC, CPCO
Parrella Health Law, Boston, Ma.

The healthcare sector is about to witness a significant shift in transparency and accountability with the introduction of the Centers for Medicare & Medicaid Services’ (CMS) latest final rule. This rule is set to illuminate the often-complex ownership structures of skilled nursing facilities (SNFs) and nursing facilities (NFs), a move that aligns with the Patient Protection and Affordable Care Act’s emphasis on disclosure.

A Closer Look at the Ownership Disclosure Rule

The CMS has taken a decisive step towards bolstering the integrity of healthcare services provided by SNFs and NFs. This final rule mandates these facilities to report in-depth data regarding their ownership and additional disclosable parties, including detailed information about their governing bodies, officers, and other pivotal entities.

Key Aspects of the Final Rule

The final rule is comprehensive, covering the following critical points:

In-Depth Data Reporting: Facilities are now required to report detailed information about their governing bodies, including officers, directors, partners, and other key management employees.

Reporting Time Frames: Information must be reported both at the initial enrollment phase and during revalidation of enrollment in Medicare or Medicaid. For Medicare SNFs, there’s also a requirement to report any changes within designated timeframes.

Clear Definitions: The rule provides clarified definitions for private equity companies (PECs) and real estate investment trusts (REITs), helping to eliminate any ambiguity in the reporting process.

Implementation Timeline: While the rule comes into effect 60 days post-publication, SNFs are granted a grace period until the CMS-855A is updated to facilitate data collection.

Cost Implications: The estimated annual reporting burden is approximately 26,974 hours, translating to a cost of over $2 million.

Legal Foundation: The legal basis for these requirements stems from Section 1124(c) of the Social Security Act.

The Purpose and Impact

The underlying goal of this rule is to enhance the quality of care in nursing facilities by shedding light on the ownership and operational control structures. The rule aims to provide both the public and regulators with a national view of ownership trends, potentially impacting patient care significantly.

Addressing Industry Concerns

This rule comes in the wake of reports suggesting that private equity ownership may lead to increased mortality rates and reduced patient welfare, coupled with higher taxpayer expenditures. The Biden-Harris Administration has been vocal about improving the quality of care in nursing facilities, with a keen focus on corporate ownership transparency.

Balancing Transparency and Administrative Burden

While the rule has been met with widespread support for its potential to improve accountability and oversight, some skepticism remains regarding the direct correlation between disclosure and quality of care improvements. Additionally, nursing facilities are expected to grapple with increased administrative responsibilities due to these new reporting requirements.

Conclusion

The CMS’s final rule is a pivotal step toward ensuring that entities behind nursing facilities operate with greater transparency, ultimately aiming to improve the quality of care for all residents. As the healthcare community prepares to adapt to these changes, the overall sentiment remains hopeful that this move will foster a more accountable and transparent nursing facility sector.