CMS intends to increase its oversight and scrutiny of changes of ownership (“CHOWs”) and operator disclosures for skilled nursing facilities. On November 2, 2022, CMS announced revisions to the Calendar Year 2023 Payment Policies that impact Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies; Medicare Shared Savings Program Requirements; and Medicare and Medicaid Provider Enrollment Policies (“CY 2023 PFS Final Rule”). The changes in CY 2023 PFS Final Rule included changes that impact skilled nursing facilities (“SNFs”).
On November 10, 2022, CMS also released changes to Chapter 10 of its Medicare Program Integrity Manual that incorporated these recent provider enrollment regulatory changes (“Program Integrity Manual Memo”).
Many of these updates impact SNF provider enrollment, revalidation, CHOW and reenrollment. The changes also include expanding several of the provider enrollment denial and revocation reasons.
Skilled Nursing Facility Change in Ownership Screening Category Change
SNFs are currently in the “limited-risk” screening category under 42 CFR § 424.518. In recent years, CMS has become increasingly concerned about certain issues within the SNF community, particularly potential and actual criminal behavior, including resident abuse. The United States Government Accountability Office published an analysis on January 14, 2022, titled “Health Care Capsule: Improving Nursing Home Quality and Information” which identified gaps in oversight of nursing homes that make it more difficult to prevent patient abuse. CMS believes that more closely scrutinizing the owners of nursing homes through criminal background checks under 42 CFR § 424.518 can help detect potential criminal or abusive behavior. CMS has revised 42 CFR § 424.518 to move initially enrolling SNFs into the high-level of categorical screening and revalidating SNFs will be subject to moderate risk-level screening.
The Program Integrity Manual Memo moves the processing of SNF enrollment applications to the “high” level of categorical screening. SNFs that are initially enrolling or undergoing a change in ownership fall within the “high” screening category under 42 CFR § 424.518. SNF revalidations are reviewed at the “moderate” screening level.
These changes will require additional steps before SNF provider enrollments, change of ownership and revalidations are approved. The Medicare Administrative Contractors (“MAC”) process the applications while a National Site Visit Contractor (“NSVC”) will complete a site visit verification process.
Key changes include:
- SNF enrollment revalidations now require an NSVC site visit. The site visit ensures that the SNF is still in compliance with CMS’s enrollment requirements. The scope of the site visit shall be consistent with CMS Program Integrity Manual requirements. The NSVC will perform the site visit. The MAC will not make a final decision regarding the revalidation application prior to the completion of the NSVC’s site visit and the MAC’s review of the results.
- An initial SNF enrollment now requires an NSVC site visit and all five percent or greater direct and indirect owners must undergo fingerprint-based criminal background checks.
- For SNF changes of ownership information, there are new detailed requirements for SNFs submitting: (1) a change of ownership application; or (2) a change of information application to report any new owner (regardless of ownership percentage). Under the Program Integrity Manual Memo, any change of ownership or change in ownership information that meets all of the following criteria would fall under (1) or (2) above:
- Does not involve the triggering of initial enrollment; and
- The change reports either:
- For partnerships – a new partner (general or limited) who owns any percentage (even one percent) of the provider/supplier; or
- Excluding partnerships – a new direct or indirect owner of at least five percent of the provider/supplier.
Upon receipt of an application described above, the MAC shall process it consistent with the instructions in CMS Program Integrity Manual, which includes requesting fingerprints from the new owner(s) if the owner has a five percent or greater direct or indirect ownership interest. The MAC will also order a site visit.
New Definitions
The Program Integrity Manual Memo adds several definitions of the entities and individuals that need to be reported, including:
- Director
-
- Director means a director of a corporation, regardless of whether the provider or supplier is a non-profit entity. This includes any member of the corporation’s governing body irrespective of the precise title of either the board or the member; said body could be a board of directors, board of trustees or similar body.
- Managing Organization
-
- A managing organization means an entity that exercises operational or managerial control over, or directly or indirectly conducts, the day-to-day operations of the provider or supplier, either under contract or through some other arrangement.
- Officer
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- Officer means an officer of a corporation, regardless of whether the provider or supplier is a non-profit entity.
Extension of Application of a Provider/Supplier’s “Bump-Up”
Per existing regulations, CMS can adjust the screening levels to high if the provider or supplier has had certain enrollment or payment issues identified in the regulation, including Medicare revocation or payment suspensions in the last ten years.
Effective January 6, 2023, per 42 CFR § 424.518(c)(4), any screening level adjustment under the regulations also applies to all other enrolled and prospective providers and suppliers that have the same legal business name and tax identification number as the provider or supplier for which the screening level was originally raised.
This means that enrollment issues related to one provider or supplier can raise enrollment screening activities for all other providers and suppliers within that tax identification number.
Effective Date
These changes are effective for provider enrollments received by CMS after January 6, 2023.
Practical Takeaways
- SNFs undergoing a change of ownership or a change of ownership information need to carefully review and assess the new steps and timing as part of their transactions.
- SNFs should undergo one of these changes and should be prepared for a site visit to be conducted before the application can be approved. This may result in additional processing time for these types of applications.
- SNFs should include a requirement of fingerprinting checks for all new owners, officers and managing individuals.
- Providers should review whether any of their enrolled providers or suppliers have had enrollment-related issues identified in 42 CFR § 424.518(c)(3) that could cause screening activities to increase for all providers within the tax identification number.
If you have questions or would like additional information about this topic, please contact:
- Sean Fahey at (317) 977-1472 or sfahey@hallrender.com;
- Brian Jent at (317) 977-1402 or bjent@hallrender.com;
- Todd Selby at (317) 977-1440 or tselby@hallrender.com;
- Lauren Hulls at (317) 977-1467 or lhulls@hallrender.com; or
- Your primary Hall Render contact.
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