UPDATE: CMS Finalizes Rule Requiring Greater SNF Ownership Transparency, Including Private Equity and REIT Disclosures, and Updates Form CMS-855A

Footnotes for this article are available at the end of this page.

The Centers for Medicare & Medicaid Services (“CMS”) released a final rule on November 15, 2023 (published on November 17, 2023) (the “Rule”), requiring greater skilled nursing facility (“SNF”) ownership transparency. The Rule finalizes a proposed rule initially published on February 15, 2023. CMS also released updates to the Form CMS-855A.

Statutory Background

Section 6101 of the Affordable Care Act (“ACA”) requires the disclosure of certain ownership, managerial, and other information regarding Medicare and/or Medicaid-enrolled nursing homes. Section 6101 of the ACA added a new section to the Social Security Act, located at 42 U.S.C. § 1320a-3, requiring “disclosing entities” under the Medicare and Medicaid programs to provide the Secretary of Health & Human Services or the appropriate state agency with “full and complete information as to the identity of each person with an ownership or control interest . . . in the entity.” The term “person with an ownership or control interest” is defined to include a person who:

(A)(i) has directly or indirectly (as determined by the Secretary in regulations) an ownership interest of 5 per centum or more in the entity; or

(ii) is the owner of a whole or part interest in any mortgage, deed of trust, note, or other obligation secured (in whole or in part) by the entity or any of the property or assets thereof, which whole or part interest is equal to or exceeds 5 per centum of the total property and assets of the entity; or

(B) is an officer or director of the entity, if the entity is organized as a corporation; or

(C) is a partner in the entity, if the entity is organized as a partnership.

Further, the entity must provide information related to “additional disclosable parties,” which includes any person or entity who:

(i) 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;

(ii) 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

(iii) provides management or administrative services, management or clinical consulting services, or accounting or financial services to the facility.1

In its fact sheet for the proposed rule, CMS stated that certain information it is authorized to collect under the statutory language above is not currently being collected and that “[t]his additional data would give CMS and the states a more complete background on the organizations and individuals that own, oversee, and facilitate the operations of nursing homes.” The Rule is intended to rectify this gap in information collection.

Those familiar with CMS disclosure requirements will notice that similar proposals were included in the May 6, 2011, proposed rule titled “Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities; Disclosure of Ownership and Additional Disclosable Parties Information.” However, CMS did not finalize the 2011 proposed rule.

The Final Rule

The Rule contains three primary components:

  1. Additional disclosures: Regulations require that the following is reported on an ongoing basis, including within 30 days of a change of ownership or control and 90 days for all other changes (and not just at initial enrollment):
    1. each member of the governing body of the facility, including the name, title, and period of service of each member;
    2. 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;
    3. each person or entity who is an additional disclosable party of the facility; and
    4. 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.
  1. Timing of reporting: Nursing facilities are required to report the information above upon initial enrollment, when revalidating, and within required timeframes specified in 42 C.F.R. § 424.516(e).
  1. Definitions: The following definitions are added in the final rule, which vary from the proposed rule and relate to additional disclosure requirements:
    1. Private equity company:
      1. Proposed: 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.).
      2. Final: 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.
    2. Real estate investment trust:
      1. Proposed: 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.
      2. Final: A real estate investment trust as defined in 26 U.S.C. 856.

The Internal Revenue Code at 26 U.S.C. 856 defines “real estate investment trust” to mean a corporation, trust, or association:

(1) which is managed by one or more trustees or directors;

(2) the beneficial ownership of which is evidenced by transferable shares, or by transferable certificates of beneficial interest;

(3) which (but for the provisions of this part) would be taxable as a domestic corporation;

(4) which is neither (A) a financial institution referred to in section 582(c)(2), nor (B) an insurance company to which subchapter L applies;

(5) the beneficial ownership of which is held by 100 or more persons;

(6) subject to the provisions of subsection (k), which is not closely held (as determined under subsection (h)); and

(7) which meets the requirements of subsection (c).

(See 26 U.S.C. 856 for additional text related to the definition of a real estate investment trust).

In the process of finalizing the proposed rule, CMS received comments from stakeholders regarding the definitions of private company and real estate investment trust, which in part resulted in the changes described above. We have included some of these comments below.

Comment: Commenters contended that our PEC definition improperly includes entities that are not private companies. A commenter did not believe that information about public entities aligns with CMS’ intent and that CMS’ main interest was in private organizations. The commenter recommended that the PEC definition be revised to read, “for purposes of this subpart only, a publicly-traded or non-publicly-traded company that collects capital investments from individuals or entities and purchased [a majority ownership share of]/[a controlling interest in] a provider.”

Response: While we appreciate this comment, we do not believe our proposed PEC definition can be interpreted to include governmental entities (which we believe the commenter was referencing when discussing “public entities”). In our view, the definition clearly only includes private entities, whether publicly traded or not. We also respectfully do not favor limiting PEC disclosure to those PECs with majority ownership of the nursing facility. We cannot obtain a full understanding of the prevalence of PECs in the nursing home sector without collecting data on all PECs that meet our definition thereof, regardless of whether the ownership interest is majority or minority.

Comment: Commenters suggested that CMS revise its proposed PEC definition. A PEC, according to the commenters, should be defined as a publicly-traded or non-publicly traded company that collects capital investments from individuals or entities and purchases an ownership share of: (1) a provider; (2) the real estate or buildings on or in which a provider operates; (3) a company with an ownership or control interest in a provider; or (4) an ADP. They further stated that CMS’ proposed definition has two drawbacks. One is that it lacks adequate specificity to capture actual private equity investment, partly because there is no legal term for private equity. The second is that it is too narrow and focuses only on the provider rather than taking into account complex ownership structures.

Response: We believe our definition is clear enough to alert nursing homes of the types of entities that must be disclosed as PECs. We disagree that the definition is too narrow. As previously explained, we consider it to be reasonably broad in terms of the companies that fall within its purview.

On the other hand, we recognize the commenters’ concerns that the proposed definition could be read to only apply to PEC interests in the provider rather than, for instance, PEC interests in one of the provider’s indirect owners. As an illustration, assume Nursing Home W is 75 percent owned by Entity X, which is 75 percent owned by Entity Y. Entity Z, a PEC, owns 90 percent of Entity Y. Although Entity Z would have to be disclosed as a 5 percent or greater indirect owner of the nursing facility, it would not qualify as a PEC for Form CMS–855A reporting purposes because its capital investment is in Entity Y instead of the provider/nursing home. This could inhibit our ability to assess the amount of PEC involvement among a provider’s indirect owners. We emphasize that we proposed our PEC definition with the intention of collecting both direct and indirect PEC ownership interests in the provider. We never meant to exclude indirect interests. To clarify this for the public, we will insert “direct or interest” before “ownership share” in our final PEC definition. We do not view this as an expansion of the data we proposed because we had always intended to require PEC data from indirect owners. We appreciate the commenters’ other suggested revisions, and we will consider them for future rulemaking.

Comment: Commenters recommended changing our proposed REIT definition to that of an entity that meets the definition of REIT in 26 U.S.C. 856 or that claims REIT status when filing taxes with the Internal Revenue Service (IRS). The commenters stated that: (1) REIT is a legal term recognized by the IRS; and (2) CMS’ proposed definition does not reference this legal definition but instead captures many companies that own the real estate or building in or on which a provider operates (or owns or operates the provider itself) but are not REITs. With so all-encompassing a definition, CMS will be unable to identify actual REITs. Commenters also recommended establishing definitions that differentiate between publicly offered and non-publicly offered REITs.

Response: The commenters’ recommendation to adopt an alternative REIT definition of REIT differs from the earlier recommendation to adopt a different PEC definition in two ways. First, some of the suggested PEC definition revisions could entail a significant increase in the number of entities that would qualify as PECs and, in turn, would have to be reported as such. The section 856 definition, on the other hand, would be narrower than the REIT definition we proposed, as the commenters indicated when noting that the proposed definition would capture numerous entities that are not REITs. This means that fewer organizations would be reported as REITs, hence potentially reducing the burden on nursing homes, although this definition will still capture entities that should appropriately be reported as REITs. Second, there is no uniform, standard, widely accepted definition of “private equity company” in our federal regulations. Such is not so with the section 856 REIT definition, which is broadly acknowledged throughout the public and private sectors and, accordingly, could help facilitate the reporting of consistent REIT data. For these two reasons (as well as for the reasons the commenters outlined), we concur with the recommendation that the section 856 definition should be utilized instead of the proposed REIT definition. We will update this final rule to include the former.

As for the recommendation to establish definitions to distinguish between publicly offered and non-publicly offered REITs, we are not at this time focused on such differences for Medicare provider enrollment purposes.

Comment: A commenter offered several recommendations regarding our REIT proposal. First, the commenter stated that CMS should adopt the definition of “publicly offered REIT” in 26 U.S.C. 562 and require said entity to designate whether it is a publicly offered REIT. Second, the commenter suggested that our proposed REIT definition be revised to mean an entity that: (1) reported itself as a REIT for its last tax return and continues to qualify as such under section 856; or (2) has not filed its first tax return but has stated its intention to identify itself as a REIT on its tax return to its owners and effectuates it stated intention. Third, the commenter urged CMS to clarify that an entity that has elected to be taxed as a REIT should continue to be categorized as such for “organizational structure” purposes.

Response: As stated, we are including within this final rule the REIT definition used in section 856, which we believe addresses the commenter’s second suggestion. We also previously noted section 562’s definition of publicly offered REIT, which is referenced in 26 U.S.C. 856(c)(5)(L)(i). If the commenter is suggesting that we include 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.

Effective Date and Updated Form CMS-855A

The Federal Register states that the Rule is effective 60 days after publication in the Federal Register, but that Medicare SNFs will not have to disclose the data required under section 1124(c) until the Form CMS–855A is: “(1) revised to collect this data; and (2) publicly available for use.” CMS noted in its fact sheet that Medicare providers and suppliers will be allowed to use the previous version of the CMS-855A for 30 days following release of the revised form. CMS also stated that publication of the Rule will result in the need to further revise the previously published proposed CMS-855A.

Though CMS seems to contemplate time required to update the CMS-855A, on November 17, 2023, a revised CMS-855A was published to CMS’ website for use by Medicare providers and suppliers. The revised form makes a significant number of changes. However, most important for purposes of this article is that Section 5 (Ownership Interest and/or Managing Control Information (Organizations)) has been updated to include additional types of organizations. That is, once an entity has been disclosed in Section 5, the applicant must identify whether the disclosed entity is a consulting firm, holding company, investment firm (other than a private equity company), management services company, private equity company, or real estate investment trust. It is unclear if CMS intends to make additional modifications.

Corporate Transparency Act

Finalization of the Rule also comes as other significant legislation begins to take effect on January 1, 2024, the Corporate Transparency Act (the “CTA”). Please see here for a recent AGG client alert on the CTA. Under the CTA, every “reporting company” must report certain information about itself, its “beneficial owners,” and “company applicants” to the Financial Crimes Enforcement Network (“FinCEN”). The beneficial owners of a reporting company include each natural person that owns or controls, directly or indirectly, 25% of the ownership interests of the entity and each person that exercises substantial control over the entity (including, for example, senior officers of the entity).

For more information, please contact AGG Healthcare partners Hedy Rubinger, Jessica Grozine, or Alex Foster.


The Arnall Golden Gregory CHOW team leads all regulatory aspects of healthcare transactions for investors, operators, managers, capital partners, and developers of every size in all 50 states. The team streamlines the regulatory process so that clients close their transactions on or ahead of schedule. Whether obtaining licensure and Medicare/Medicaid approvals, structuring transactions to expedite closings, anticipating issues to minimize cash flow disruption, negotiating regulatory terms in deal documents, creatively resolving diligence issues, or advising on CHOW guidelines and compliance, the team provides extensive experience and practical solutions. To date, the CHOW team has served as primary regulatory counsel in transactions valued at more than $35 billion.


[1] 42 U.S.C. § 1320a-3(c)(5)(A).