Enhanced Disclosure Requirements Have Arrived

Against the backdrop of increasing regulatory scrutiny of private equity ownership in the healthcare space, Medicare skilled nursing and Medicaid nursing facilities (“SNF”) and private equity companies looking to acquire SNFs must be aware of new changes to the Centers for Medicare and Medicaid Services (“CMS”) Form 855A requiring extensive new disclosures of ownership and managerial information. Published by CMS on October 1, 2024, the new SNF Attachment to CMS-855A (the “Attachment”) hearkens back to a final rule (88 FR 80141) issued by CMS in November 2023 which took effect earlier this year (the “Final Rule”).[1] All SNFs, either during initial enrollment, revalidation, reactivation, or a change of ownership or information, must complete and submit the updated CMS-855A. The revalidation application due date for all SNFs, irrespective of the state in which they are located, is May 1, 2025.

Although the Affordable Care Act already requires certain disclosures under Section 1124(a) of the Social Security Act, the Final Rule activates the enhanced reporting requirements of Section 1124(c) of the SSA. The Final Rule requires SNFs to disclose detailed information about their ownership and management as well as additional data regarding other parties with which the SNF is associated and the ownership structures of those other parties. Specifically, the Attachment requires disclosure of the following information (although some of it is not new to the CMS-855A):

1. Each member of the SNF’s governing body, irrespective of the SNF’s business structure (e.g., LLC, corporation, etc.).
2. Each person or entity who is an officer, director, member, partner, trustee, or managing employee (as defined in § 424.502) of the SNF, regardless of percentage of ownership.
3. Each person or entity who is an additional disclosable party (“ADP”) of the SNF.
4. The organizational structure of each ADP of the SNF and a description of the relationship of each ADP to the facility and to one another.

The Attachment now also requires SNFs to report information on ADPs that have additional potential to influence businesses operations, including private equity companies and Real Estate Investment Trusts. Encompassing a broad swath of organizations on the periphery of SNF operations, ADPs are defined in Section 1124(c) to include any organization that:

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

The ADP disclosure requirements will prove particularly cumbersome, as SNFs must now report, depending on the organizational type of the ADP, all officers, directors, managers, partners, and individuals or entities with direct or indirect ownership in the ADP. CMS reiterated this strict requirement in its “Guidance for SNF Attachment on Form CMS-855A” dated November 26, 2024, stating that reporting SNFs must individually list each partner in a general partnership ADP—regardless of ownership percentage—even if there are “150 partners within [the] partnership.”

SNFs should note that the new Attachment (as well as the year-old CMS rule from which it originates) adds an extra layer of complexity to the CMS-855A disclosure. However, concerns about private equity involvement in the healthcare industry are nothing new to CMS. In fact, CMS considered including the additional disclosure requirements within an earlier final rule published on August 8, 2011. Ultimately, the disclosure provisions were left out of the 2011 final rule and not incorporated into the regulations until last November.

Of course, there is a chance that the above-mentioned SNF reporting requirements will be walked back under the new administration set to take the helm in January. Key leadership in the administration seems to favor Medicare Advantage programs and other hallmarks of private-sector Medicare involvement, which suggests a distaste for disclosure requirements and a more laissez-faire approach to federal programs generally. But at least through January 20, 2015, these SNF-specific reporting requirements remain.

If you are a SNF, long term care nursing home facility, or other healthcare facility in search of assistance with CMS reporting requirements, completing and filing the new updated CMS-855A, transactions involving the sale or purchase of SNFs or other long term care facilities, or other questions associated with the long term care industry, the Nelson Mullins healthcare team is ready and able to assist.