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, 80141-80169 [2023-25408]

Agencies

• Centers for Medicare & Medicaid Services
• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[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 [www.gpo.gov]
[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 [email protected].

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''):
     Each member of the facility's governing body, including 
the name, title, and period of service of each member.
     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.
     Each person or entity who is an additional disclosable 
party of the facility.
     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:
     Section 1124(c) of the Act requires Medicare and Medicaid 
nursing facilities to disclose certain information about their 
ownership and management.
     Section 1866(j) of the Act furnishes specific authority 
regarding the enrollment process for providers and suppliers.
     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:
     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.
     Change of ownership--The provider or supplier is reporting 
a change in its ownership.
     Revalidation--The provider or supplier is revalidating its 
Medicare enrollment information in accordance with Sec.  424.515.
     Reactivation--The provider or supplier is seeking to 
reactivate its Medicare billing privileges after it was deactivated in 
accordance with Sec.  424.540.
     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:
     Requiring providers to disclose information regarding 
ownership, business transactions, certain criminal convictions, and 
affiliations (Sec. Sec.  455.104 through 455.107).
     Screening providers consistent with the procedures in part 
455, subpart E (Sec.  455.410).
     Revalidating a provider's enrollment at least every 5 
years (Sec.  455.414).
     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--
     The name, title, and period of service of each member of 
the facility's governing body;
     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
     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--
     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;
     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
     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--
     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;
     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);
     A general partnership--The partners of the general 
partnership;
     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;
     A trust--The trustees of the trust;
     An individual--Contact information for the individual; and
     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\ 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/.
    \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:
     Each member of the facility's governing body, including 
the name, title, and period of service of each such member.
     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.
     Each person or entity who is an additional disclosable 
party of the facility.
     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, cms.data.gov, 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 cms.data.gov. A commenter stated that many nursing home 
residents and their families are unfamiliar with the cms.data.gov 
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 
data.cms.gov 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--
     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.
     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 (https://www.cms.gov/files/document/qso-23-18-nh.pdf).

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:
     We are inserting ``direct or indirect'' before the term 
``ownership share'' in our PEC definition in 42 CFR 424.502.
     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:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     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 (https://www.bls.gov/oes/current/oes_nat.htm):

                          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\
---------------------------------------------------------------------------

    \21\ https://www.cms.gov/regulations-and-guidance/legislation/paperworkreductionactof1995/pra-listing/cms-855a.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \22\ 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/.
---------------------------------------------------------------------------

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 (https://www.bls.gov/oes/current/oes119111.htm). 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 https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/circulars/A4/a-4.pdf), 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 https://www.sba.gov/document/support-table-size-standards 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 which is 
equal to or exceeds 5 percent.
    (2) 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.
    (3) A general partnership. The partners of the general partnership.
    (4) 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.
    (5) A trust. The trustees of the trust.
    (6) An individual. Contact information for the individual.
* * * * *
    Private equity company means, for purposes of this subpart only, a 
publicly traded or non-publicly traded company that collects capital 
investments from individuals or entities and purchases a direct or 
indirect ownership share of a provider.
    Real estate investment trust means, for purposes of this subpart 
only, a real estate investment trust as defined in 26 U.S.C. 856.
* * * * *

0
3. Section 424.516 is amended by adding paragraph (g) to read as 
follows:


Sec.  424.516  Additional provider and supplier requirements for 
enrolling and maintaining active enrollment status in the Medicare 
program.

* * * * *
    (g) Skilled nursing facilities. (1) In addition to all other 
applicable reporting requirements in this subpart, a skilled nursing 
facility (as defined in section 1819(a) of the Act) must disclose upon 
initial enrollment (which, for purposes of this paragraph (g), also 
includes a change of ownership under 42 CFR 489.18) and revalidation 
the following information:
    (i) Each member of the governing body of the facility, including 
the name, title, and period of service for each such member.
    (ii) Each person or entity who is an officer, director, member, 
partner, trustee, or managing employee (as defined in Sec.  424.502) of 
the facility, including the name, title, and period of service of each 
such person or entity.
    (iii) Each person or entity who is an additional disclosable party 
of the facility (as defined in Sec.  424.502).
    (iv) The organizational structure (as defined in Sec.  424.502) 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.
    (2) The skilled nursing facility need not disclose the same 
information described in paragraph (g)(1) of this section more than 
once on the same enrollment application submission.
    (3) The skilled nursing facility must report any change to any of 
the information described in paragraph (g)(1) of this section 
consistent with the applicable timeframes in paragraph (e) of this 
section.

PART 455--PROGRAM INTEGRITY: MEDICAID

0
4. The authority citation for part 455 continues to read as follows:

    Authority:  42 U.S.C. 1302.

0
5. Section 455.101 is amended by:
0
a. Adding the definition of ``Additional disclosable party'' in 
alphabetical order;
0
b. Revising the definition of ``Managing employee''; and

[[Page 80169]]

0
c. Adding the definition of ``Organizational structure'' in 
alphabetical order.
    The additions and revision read as follows:


Sec.  455.101   Definitions.

    Additional disclosable party means, with respect to a nursing 
facility defined in section 1919(a) of the Act, any person or entity 
who--
    (1) Exercises operational, financial, or managerial control over 
the facility or a part thereof, or provides policies or procedures for 
any of the operations of the facility, or provides financial or cash 
management services to the facility;
    (2) 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
    (3) Provides management or administrative services, management or 
clinical consulting services, or accounting or financial services to 
the facility.
* * * * *
    Managing employee means--
    (1) A general manager, business manager, administrator, director, 
or other individual who exercises operational or managerial control 
over, or who directly or indirectly conducts, the day-to-day operation 
of an institution, organization, or agency, either under contract or 
through some other arrangement, whether or not the individual is a W-2 
employee of the institution, organization, or agency; or
    (2) With respect to the additional requirements at Sec.  455.104(e) 
for a nursing facility defined in section 1919(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 nursing facility 
defined in section 1919(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 which is 
equal to or exceeds 5 percent.
    (2) 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.
    (3) A general partnership. The partners of the general partnership.
    (4) 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.
    (5) A trust. The trustees of the trust.
    (6) An individual. Contact information for the individual.
* * * * *

0
6. Section 455.104 is amended by redesignating paragraph (e) as 
paragraph (f) and adding a new paragraph (e) to read as follows:


Sec.  455.104   Disclosure by Medicaid providers and fiscal agents: 
Information on ownership and control.

* * * * *
    (e) Nursing facilities. (1) In addition to all other applicable 
reporting requirements in this subpart, a nursing facility (as defined 
in section 1919(a) of the Act) must disclose upon initial enrollment 
and revalidation the following information:
    (i) Each member of the governing body of the facility, including 
the name, title, and period of service for each such member.
    (ii) Each person or entity who is an officer, director, member, 
partner, trustee, or managing employee (as defined in Sec.  455.101) of 
the facility, including the name, title, and period of service of each 
such person or entity.
    (iii) Each person or entity who is an additional disclosable party 
of the facility (as defined in Sec.  455.101).
    (iv) The organizational structure (as defined in Sec.  455.101) 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.
    (2) The State need not require the facility to disclose the same 
information described in this paragraph (e) more than once on the same 
enrollment application submission.

Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2023-25408 Filed 11-15-23; 8:45 am]
BILLING CODE 4120-01-P