Federal Register / Vol. 88, No. 221 / Friday, November 17, 2023 / Rules and Regulations 80141 

E. Executive Order 13132 (Federalism) 

This action does not have federalism 

implications. It will not have substantial 

direct effects on the states, on the 

relationship between the National 

Government and the states, or on the 

distribution of power and 

responsibilities among the various 

levels of government. 

F. Executive Order 13175: Consultation 

and Coordination With Indian Tribal 

Governments 

This action does not have tribal 

implications as specified in Executive 

Order 13175. Thus, Executive Order 

13175 does not apply to this action. 

G. Executive Order 13045: Protection of 

Children From Environmental Health 

Risks and Safety Risks 

The EPA interprets Executive Order 

13045 as applying only to those 

regulatory actions that concern 

environmental health or safety risks that 

the EPA has reason to believe may 

disproportionately affect children, per 

the definition of ‘‘covered regulatory 

action’’ in section 2–202 of the 

Executive order. This action is not 

subject to Executive Order 13045 

because it does not concern an 

environmental health risk or safety risk. 

H. Executive Order 13211: Actions 

Concerning Regulations That 

Significantly Affect Energy Supply, 

Distribution, or Use 

This action is not subject to Executive 

Order 13211, because it is not a 

significant regulatory action under 

Executive Order 12866. 

I. National Technology Transfer and 

Advancement Act 

This rulemaking does not involve 

technical standards. 

J. Executive Order 12898: Federal 

Actions To Address Environmental 

Justice in Minority Populations and 

Low-Income Populations 

The EPA believes that this action does 

not have disproportionately high and 

adverse human health or environmental 

effects on minority populations, lowincome populations and/or indigenous 

peoples, as specified in Executive Order 

12898 (59 FR 7629, February 16, 1994). 

K. The Congressional Review Act 

This rule is exempt from the 

Congressional Review Act (CRA) 

because it is a rule of agency 

organization, procedure or practice that 

does not substantially affect the rights or 

obligations of non-agency parties. 

List of Subjects in 40 CFR Part 16 

Environmental protection, 

Administrative practice and procedure, 

Confidential business information, 

Government employees, Privacy. 

Kimberly Y. Patrick, 

Principal Deputy Assistant Administrator, 

Office of Mission Support. 

For the reasons stated in the 

preamble, title 40, chapter I, part 16 of 

the Code of Federal Regulations is 

amended as follows: 

PART 16—IMPLEMENTATION OF 

PRIVACY ACT OF 1974 

■ 1. The authority citation for part 16 

continues to read as follows: 

Authority: 5 U.S.C. 301, 552a (as revised). 

■ 2. Amend § 16.12 by: 

■ a. Revising paragraphs (a)(1), (a)(4)(i) 

and (iii), (a)(5) introductory text, and 

(b)(1); 

■ b. Adding paragraph (b)(4)(iii); and 

■ c. Revising paragraph (b)(5) 

introductory text. 

The revisions and additions read as 

follows: 

§ 16.12 Specific exemptions. 

(a) * * * 

(1) Systems of records affected. (i) 

EPA–17 Online Criminal Enforcement 

Activities Network (OCEAN). 

(ii) EPA–21 External Compliance Case 

Tracking System (EXCATS). 

(iii) EPA–30 Inspector General 

Enterprise Management System (IGEMS) 

Hotline Module. 

(iv) EPA–40 Inspector General 

Enterprise Management System (IGEMS) 

Investigative Module. 

(v) EPA–63 eDiscovery Enterprise 

Tool Suite. 

(vi) EPA–79 NEIC Master Tracking 

System. 

(vii) EPA–83 Personnel Security 

System (PSS) 2.0. 

* * * * * 

(4) * * * 

(i) EPA systems of records 17, 30, 40, 

63, and 79 are exempted from the 

following provisions of the PA, subject 

to the limitations set forth in 5 U.S.C. 

552a(k)(2): 5 U.S.C. 552a(c)(3); (d); 

(e)(1), (4)(G) and (4)(H); and (f)(2) 

through (5). EPA system of records 21 is 

exempt from the following provisions of 

the PA, subject to limitations set forth 

in 5 U.S.C. 552a(k)(2): 5 U.S.C. 

552a(c)(3), (d), and (e)(1). EPA system of 

records 83 is exempt from the following 

provisions of the PA, subject to the 

limitations set forth in 5 U.S.C. 

552a(k)(2): 5 U.S.C. 552a(d); (e)(1); 

(e)(4)(G), (4)(H) and (4)(I); and (f)(2) 

through (5). 

* * * * * 

(iii) EPA–83 Personnel Security 

System (PSS) 2.0 is exempted under 5 

U.S.C. 552a(k)(2). 

(5) Reasons for exemption. EPA 

systems of records 17, 21, 30, 40, 63, 79, 

and 83 are exempted from the 

provisions of the PA in paragraph (a)(4) 

of this section for the following reasons: 

* * * * * 

(b) * * * 

(1) Systems of records affected. (i) 

EPA 36 Research Grant, Cooperative 

Agreement, and Fellowship Application 

Files. 

(ii) EPA 40 Inspector General’s 

Operation and Reporting (IGOR) System 

Personnel Security Files. 

* * * * * 

(4) * * * 

(iii) EPA 83 is exempted from the 

following provisions of the PA, subject 

to the limitations of 5 U.S.C. 

552(a)(k)(5): 5 U.S.C. 552a(d); (e)(1); 

(e)(4)(G), (4)(H) and (4)(I); and (f)(2) 

through (5). 

(5) Reasons for exemption. EPA 36, 

40, 83, and 100 are exempted from the 

above provisions of the PA for the 

following reasons: 

* * * * * 

[FR Doc. 2023–24669 Filed 11–16–23; 8:45 am] 

BILLING CODE 6560–50–P 

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. 

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 


khammond on DSKJM1Z7X2PROD with RULES
80142 Federal Register / Vol. 88, No. 221 / Friday, November 17, 2023 / Rules and Regulations 

1We 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.’’ 

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 Frank.Whelan@cms.hhs.gov. 

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

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 § 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 § 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 


khammond on DSKJM1Z7X2PROD with RULES
Federal Register / Vol. 88, No. 221 / Friday, November 17, 2023 / Rules and Regulations 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 § 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 § 424.515. 

• Reactivation—The provider or 

supplier is seeking to reactivate its 

Medicare billing privileges after it was 

deactivated in accordance with 

§ 424.540. 

• Change of information—The 

provider or supplier is reporting a 

change in its existing enrollment 

information in accordance with 

§ 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 § 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 (§§ 455.104 

through 455.107). 

• Screening providers consistent with 

the procedures in part 455, subpart E 

(§ 455.410). 

• Revalidating a provider’s 

enrollment at least every 5 years 

(§ 455.414). 

• Performing site visits and criminal 

background checks in certain 

circumstances (§§ 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 

§§ 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. 


khammond on DSKJM1Z7X2PROD with RULES
80144 Federal Register / Vol. 88, No. 221 / Friday, November 17, 2023 / Rules and Regulations 

3 ‘‘Prospective Payment System and Consolidated 

Billing for Skilled Nursing Facilities for FY 2012; 

Final Rule’’ (76 FR 48485). 

4Medicare Payment Advisory Commission, 

‘‘Congressional Request: Private Equity and 

Medicare,’’ June 2021. jun21_ch3_medpac_report_

to_congress_sec.pdf. 

5Atul Gupta, Sabrina T. Howell, Constantine 

Yannelis, and Abhinav Gupta, Does Private Equity 

Investment in Healthcare Benefit Patients? Evidence 

from Nursing Homes, 2021, p. i. 

6Robert Tyler Braun, Hye-Young Jung, Lawrence 

Casalino, et al., JAMA Health Forum, November 19, 

2021. 

7 Ibid. 

8Robert 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 | Health Affairs The Role Of Real 

Estate Investment Trusts In Staffing US Nursing 

Homes | Health Affairs. 

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. 

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 LongStay Residents,’’ the report stated that 

PECs seek annual returns of 20% or 

more; with this pressure to generate 

high short-term profits, private-equityowned 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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Federal Register / Vol. 88, No. 221 / Friday, November 17, 2023 / Rules and Regulations 80145 

9https://www.whitehouse.gov/briefing-room/ 

statements-releases/2022/02/28/fact-sheetprotecting-seniors-and-people-with-disabilities-byimproving-safety-and-quality-of-care-in-the-nationsnursing-homes/. 

10 Ibid. 

11 GAO–22–105422, p. 1. 

12OEI–07–20–00180, p. 1. 

13 Ibid. 

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

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 LongTerm 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

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 § 424.516 

We proposed to add new paragraph 

(g)(1) to § 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 § 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 § 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 § 424.516(g)(1), we proposed to 

add several definitions to § 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, § 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 


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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 § 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 § 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 § 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 § 455.101, we proposed to add the 

same definitions of ‘‘additional 

disclosable party’’ and ‘‘organizational 

structure’’ that we proposed in 

§ 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 § 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 § 424.502, we proposed to 

add to the end of the definition of this 

term in § 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 § 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 § 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 

§ 455.104. 

First, existing § 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 

§ 455.104(f) for organizational purposes 

and to establish a new § 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 § 455.104(e)(1)(i) through (iv) 

would include the same data elements 

described in proposed § 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 § 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 § 424.516(g)(2) for 

Medicare but with an important 

difference, in that § 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 

§ 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 

§ 424.510(d)(3), an authorized official or 

delegated official (as those terms are 

defined in § 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 


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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 § 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. 


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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 subregulatory 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 upto-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. 


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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 enrollmenteligible 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 


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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 subregulatory 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 subregulatory 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 multistate 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 § 424.510(d)(2)(ii), 

such as sales agreements, adverse legal 


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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 

§ 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-bedetermined 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 § 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 § 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 

§ 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 


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80152 Federal Register / Vol. 88, No. 221 / Friday, November 17, 2023 / Rules and Regulations 

15CMS 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.’’ 

and operators who knowingly submit 

false information. 

Response: As the commenters noted, 

CMS has the authority to deny or revoke 

enrollment under §§ 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 § 424.530(f),15 and a provider 

revoked under § 424.535(a)(4) is subject 

to (with certain exceptions) a maximum 

10-year reenrollment bar under per 

§ 424.535(c). We further state in 

§§ 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. 

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 subregulatory 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 


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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. 


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16Medicare 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: 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 § 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. 

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 § 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. 


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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 subregulatory 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 § 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 § 413.17. It could include, 

the commenter stated, language from the 

Medicare Provider Reimbursement 

Manual stating that the § 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 subregulatory 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 


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80156 Federal Register / Vol. 88, No. 221 / Friday, November 17, 2023 / Rules and Regulations 

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 

§ 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 

§§ 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 

§ 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 § 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 


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Federal Register / Vol. 88, No. 221 / Friday, November 17, 2023 / Rules and Regulations 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 

§ 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 

§ 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 § 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 

§ 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, governmentowned); 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 § 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 


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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 subregulatory 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 § 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 

§ 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 § 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 


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17Atul Gupta, Sabrina T. Howell, Constantine 

Yannelis, and Abhinav Gupta, Does Private Equity 

Investment in Healthcare Benefit Patients? Evidence 

from Nursing Homes, 2021, p. i. 

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. 

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 nonregulatory 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 nonpublicly-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 


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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 nonpublicly 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 


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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/nonprofit 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-andcomment 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 subregulatory 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 § 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 substandard 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 


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18 GAO–23–104813. 

19 Ibid., p. 18. 

20 Ibid., p. 25. 

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

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 


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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). 


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Disclosure of this heretofore nonmandatory 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 

§ 424.516(g), will include changes of 

ownership under 42 CFR 489.18); (2) 

applications to revalidate the SNF’s 

current enrollment information per 

§ 424.515; and (3) reporting changes to 

any of the SNF’s previously disclosed 

supplemental data per proposed 

§ 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

Occupation title Occupation 

code 

Mean hourly 

wage 

($/hr) 

Fringe 

benefits and 

overhead 

($/hr) 

Adjusted 

hourly wage 

($/hr) 

Office and Administrative Support Workers, All Other .................................... 43–9199 20.75 20.75 41.50 

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 § 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 Medicareenrolled 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

OMB control 

No. 

Number of 

respondents 

Number of 

responses 

Burden per 

response 

(hours) 

Total annual 

burden 

(hours) 

Hourly labor 

cost of 

reporting 

($) 

(includes 

100% fringe 

benefits) * 

Total cost 

($) 

Medicare 

Initial Form CMS–855A 

Applications .............. 0938–0685 1,055 1,055 2.25 2,374 99.49 236,189 


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21https://www.cms.gov/regulations-andguidance/legislation/paperworkreductionactof1995/ 

pra-listing/cms-855a. 

TABLE 2—HOUR AND BURDEN ESTIMATES FOR NURSING HOME DISCLOSURE PROVISIONS—Continued 

OMB control 

No. 

Number of 

respondents 

Number of 

responses 

Burden per 

response 

(hours) 

Total annual 

burden 

(hours) 

Hourly labor 

cost of 

reporting 

($) 

(includes 

100% fringe 

benefits) * 

Total cost 

($) 

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 

Applications .............. 0938–0685 951 951 2.25 2,140 99.49 212,909 

Form CMS–855A 

Change of Information Applications ....... 0938–0685 4,500 4,500 1 4,500 99.49 447,705 

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

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

Occupation title Occupation 

code 

Mean hourly 

wage 

($/hr) 

Fringe 

benefits and 

overhead 

($/hr) 

Adjusted 

hourly wage 

($/hr) 

Office and Administrative Support Workers, All Other .................................... 43–9199 20.75 20.75 41.50 

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. 


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22https://www.whitehouse.gov/briefing-room/ 

statements-releases/2022/02/28/fact-sheetprotecting-seniors-and-people-with-disabilities-byimproving-safety-and-quality-of-care-in-the-nationsnursing-homes/. 

TABLE 4—HOUR AND BURDEN ESTIMATES FOR PEC AND REIT PROVISIONS

OMB control 

No. 

Number of 

respondents 

Number of 

responses 

Burden per 

response 

(hours) 

Total annual 

burden 

(hours) 

Hourly labor 

cost of 

reporting ($) 

(includes 

100% fringe 

benefits) * 

Total cost 

($) 

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 Applications ....... 0938–0685 27,000 27,000 0.2 5,400 41.50 224,100 

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 BidenHarris Administration’s initiative to 

improve nursing home safety, quality, 

and accountability.22

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. 


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Federal Register / Vol. 88, No. 221 / Friday, November 17, 2023 / Rules and Regulations 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 × $123.06) + (1.91 

× $157.48) or $545.42. Therefore, we 

estimate that the total cost of reviewing 

this final rule is $4,160,189 ($535.42 × 

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 

§ 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

Category Primary 

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 


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80168 Federal Register / Vol. 88, No. 221 / Friday, November 17, 2023 / Rules and Regulations 

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 

■ 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 

■ 2. Section 424.502 is amended by— 

■ a. Adding the definition of 

‘‘Additional disclosable party’’ in 

alphabetical order; 

■ b. Revising the definition of 

‘‘Managing employee’’; and 

■ 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: 

§ 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 § 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. 

* * * * * 

■ 3. Section 424.516 is amended by 

adding paragraph (g) to read as follows: 

§ 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 § 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 § 424.502). 

(iv) The organizational structure (as 

defined in § 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 

■ 4. The authority citation for part 455 

continues to read as follows: 

Authority: 42 U.S.C. 1302. 

■ 5. Section 455.101 is amended by: 

■ a. Adding the definition of 

‘‘Additional disclosable party’’ in 

alphabetical order; 

■ b. Revising the definition of 

‘‘Managing employee’’; and 


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Federal Register / Vol. 88, No. 221 / Friday, November 17, 2023 / Rules and Regulations 80169 

■ c. Adding the definition of 

‘‘Organizational structure’’ in 

alphabetical order. 

The additions and revision read as 

follows: 

§ 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 § 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. 

* * * * * 

■ 6. Section 455.104 is amended by 

redesignating paragraph (e) as paragraph 

(f) and adding a new paragraph (e) to 

read as follows: 

§ 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 § 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 § 455.101). 

(iv) The organizational structure (as 

defined in § 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 

DEPARTMENT OF TRANSPORTATION 

Federal Motor Carrier Safety 

Administration 

49 CFR Chapter III 

[Docket No. FMCSA–2023–0174] 

RIN 2126–AC60 

General Technical, Organizational, 

Conforming, and Correcting 

Amendments to the Federal Motor 

Carrier Safety Regulations 

AGENCY: Federal Motor Carrier Safety 

Administration (FMCSA), Department 

of Transportation (DOT). 

ACTION: Final rule. 

SUMMARY: FMCSA amends its 

regulations by making technical 

corrections throughout the Federal 

Motor Carrier Safety Regulations 

(FMCSRs). The Agency makes minor 

changes to correct inadvertent errors 

and omissions, remove or update 

obsolete references, and improve the 

clarity and consistency of certain 

regulatory provisions. The Agency also 

makes a change to its rules of 

organization, procedures, and practice. 

DATES: This final rule is effective 

November 17, 2023, except for 

amendatory instruction 88, which is 

effective January 16, 2024. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Nicholas Warren, Regulatory 

Development Division, Office of Policy, 

FMCSA, 1200 New Jersey Avenue SE, 

Washington, DC 20590–0001; (202) 366– 

6124; nicholas.warren@dot.gov. 

SUPPLEMENTARY INFORMATION: 

I. Legal Basis for the Rulemaking 

Congress delegated certain powers to 

regulate interstate commerce to DOT in 

numerous pieces of legislation, most 

notably in section 6 of the Department 

of Transportation Act (DOT Act) (Pub. 

L. 89–670, 80 Stat. 931, 937, Oct. 15, 

1966). Section 6 of the DOT Act 

transferred to DOT the authority of the 

former Interstate Commerce 

Commission (ICC) to regulate the 

qualifications and maximum hours of 

service of employees, the safety of 

operations, and the equipment, of motor 

carriers in interstate commerce (80 Stat. 

939). This authority, first granted to the 

ICC in the Motor Carrier Act of 1935 

(Pub. L. 74–255, 49 Stat. 543, Aug. 9, 

1935), now appears in 49 U.S.C. chapter 

315. The regulations issued under this 

authority, as well as subsequently 

enacted laws, became known as the 

FMCSRs, codified at 49 Code of Federal 

Regulations (CFR) parts 350 through 

399. The administrative powers to 


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