New Federal SNF Disclosure Requirements
CMS announced in a September 2024 Medicare Learning Network notice that CMS will revalidate all enrolled skilled nursing facilities (SNFs) from October through December 2024 to collect data on ownership, managerial, and related party information. Medicare Administrative Contractors will send revalidation notices to one-third of SNFs in October 2024 and two-thirds of SNFs in November or December 2024. Needless to say, the new reporting requirements are onerous and complicated to understand.
As we reported in 2022, the White House then announced the Administration’s reform efforts to be developed by and implemented through the U.S. Dept. of Health and Human Services (HHS) to improve the safety and quality of nursing home care nationally. Those reform initiatives were to include efforts to improve transparency of nursing home facility ownership and Finances, in which CMS would implement ACA requirements regarding transparency in corporate ownership by collecting and publicly reporting “more robust” corporate ownership and operating data. Such data would be available on Nursing Home Compare that will be enhanced to indicate additional measures such as the new minimum staffing requirement to be implemented, and rating will be based more on verifiable data rather than self-reported data.
That time has finally arrived. A new SNF Guidance for SNF Attachment on Form CMS-855A explains how CMS will collect all SNF data previously disclosed in Sections 5 and 6 of the Form CMS-855A and additional information that section 1124(c) requires. SNFs will no longer complete Sections 5 and 6 of the Form CMS-855A. Here is what CMS itself says in the SNF Guidance Attachment:
“We respectfully note that CMS in its various guidance will be unable to address all conceivable factual scenarios within and among organizations or to individually identify every potential disclosable party and associated occupational title (e.g., whether individuals X and Y – who perform Functions A and B for the SNF, furnish Services C and D to the SNF, or have Relationships E and F -- must be reported). This is because there could be hundreds of such scenarios given the vast variety of organizational structures, relationships, personnel functions, services, occupations, etc. If the SNF is uncertain as to whether a certain party must be reported, it should disclose said party. As we stated in the November 17, 2023, final rule: “In general, this rule should be construed towards disclosure and, if in doubt about whether additional information should be released, SNFs should disclose it.” (88 FR 80142).
We recommend that SNFs contact their legal counsel or other professional advisor (e.g., provider enrollment business advisor) with questions regarding whether specific persons or entities within their organization should be disclosed.” Emphasis added.
Here are the highlights of the new Section 1124(c) and 42 CFR § 424.516(g) reporting requirements:
• Each member of the SNF’s governing body.
• Each person or entity who is an officer, director, member, partner, trustee, or managing employee (as defined in § 424.502) of the SNF.
• Each person or entity who is an additional disclosable party (ADP) of the SNF.
• 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.
While the first two bulleted categories above are not unexpected or unusual, the new ADP disclosure requirement is potentially very cumbersome. The definition of an ADP includes any person or entity who (1) exercises operational, financial, or managerial control over the SNF or a part thereof, or provides policies or procedures for any of the SNF’s operations, or provides financial or cash management services to the SNF; (2) leases or subleases real property to the SNF, or owns a whole or part interest equal to or exceeding 5 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 SNF Guidance Attachment includes examples of ADP reporting in the following categories:
(i) Accounting Services, e.g., accountant or accounting company the SNF hires/contracts with to perform any accounting activity (e.g., preparation of cost reports) for the SNF.
(ii) Administrative Services, e.g., compliance, human resources, public relations/outreach/advertising, IT, or other consultants.
(iii) Cash Management Services, e.g., parties that give guidance/advice on cash flow and other financial matters or the handling the SNF’s financial transactions, such as ACH payments and mobile banking.
(iv) Clinical Consulting Services, e.g., medical or no professional clinical consultants.
(v) Financial Control, e.g., banks that have given the SNF a line of credit.
(vi) Financial Services, e.g., investment banking, investment management, asset management, financial advice, accounting.
(vii) Managerial Control e.g., supervisors or non-supervisors who nonetheless oversee and are responsible for any aspect of the SNF’s operations.
(viii) Management Services, e.g., parties that furnish to the SNF the services described in (vii) above under contract or other arrangement with the SNF (e.g., management company).
(ix) Operational Control – Includes persons/entities that oversee and have responsibility for any aspect of the SNF’s daily activities or transactions (e.g., person in charge of the SNF’s (1) medical records, (2) patient activities, or (3) dietary/food operations). The person need not serve in a supervisory role to have operational control.
(x) “Part” of the Facility – Includes any physical or operational portion of the facility (e.g., a separate wing of the facility; social worker unit; nursing unit).
(xi) Policies or Procedures – Includes persons/entities responsible for developing or furnishing guidelines regarding the execution of any aspect of the SNF’s operations (e.g., consultant hired to prepare emergency/evacuation plans, patient treatment procedures, patient transfer procedures, etc.).
The SNF Guidance Attachment makes clear that legal services furnished by attorneys do not typically fall within any of the above categories unless the services are not legal in nature.
But wait, there’s more. In addition to identifying and disclosing the SNF accountant, consultant, bank, landlord etc. the disclosure for such persons/entities includes the following: For each ADP, the SNF must also report the following persons/entities:
(i) If the ADP is a corporation, the officers and directors of the ADP; or any person or entity with a 5 percent or greater direct or indirect ownership interest in the ADP
(ii) If the ADP is an LLC, any person or entity that manages the LLC; or any person or entity that has a direct or indirect ownership interest in the LLC, regardless of the percentage.
The Final Rule and SNF Guidance Attachment is stating that SNFs will have to report all of the details of the ownership of each consultant, bank, accounting firm etc., including even public entities. How a SNF will be able to obtain such information is unclear, especially if the ADP does not cooperate in providing the information. If say, a SNF has a line of credit with Bank of America, all officers, directors and persons or entities with a 5 percent or greater ownership interest in Bank of America will have to be disclosed. CMS has not clarified how issues in collecting such data should be handled. Indeed, CMS seems to have no sympathy for SNFs that are unable to fully comply, see e.g., this question and answer published in the Final Rule:
“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.” 88 FR 80153.
Our firm is available to assist in completing the 855-A form, PECOS revalidation and related issues.