Bill Text: NJ A1872 | 2024-2025 | Regular Session | Introduced
Bill Title: Revises reporting requirements for nursing homes concerning financial disclosures and ownership structure.
Spectrum: Partisan Bill (Democrat 9-0)
Status: (Introduced) 2024-01-09 - Introduced, Referred to Assembly Aging and Human Services Committee [A1872 Detail]
Download: New_Jersey-2024-A1872-Introduced.html
STATE OF NEW JERSEY
221st LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2024 SESSION
Sponsored by:
Assemblyman HERB CONAWAY, JR.
District 7 (Burlington)
Co-Sponsored by:
Assemblyman Danielsen and Assemblywoman Haider
SYNOPSIS
Revises reporting requirements for nursing homes concerning financial disclosures and ownership structure.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act concerning nursing homes, amending P.L.2021, c.95, P.L.2021, c.457, and P.L.2020, c.89, and amending and supplementing P.L.1977, c.237.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 2 of P.L.2021, c.95 (C.26:2H-7.25) is amended to read as follows:
2. a. Prior to transferring ownership of a nursing home, the prospective new owner shall submit an application to the Department of Health that meets the requirements of section 3 of this act. The application shall include the following items:
(1) the transfer of ownership fee established by the department;
(2) a cover letter stating the applicant's intent to purchase the nursing home, and identification of the nursing home by name, address, county, and number and type of licensed beds;
(3) a description of the proposed transaction, including:
(a) identification of 100 percent of the current owners of the nursing home;
(b) identification of 100 percent of the proposed new owners, including the names and addresses of all principals and interested parties; and
(c) [if applicable,] a copy of [an] the applicant's organizational chart, [including] which shall include, parent corporations [and] , wholly-owned subsidiaries [;] , and related parties; and unrelated parties that will or are expected to provide a service, a facility, or supplies to the nursing home and that will or are expected to be paid more than $200,000 by the nursing home in the coming year; and
(4) a copy of the agreement of sale and, if applicable, a copy of any lease and management agreements.
[The applicant may additionally submit a summary of the application materials that includes such details concerning the application as are required by the department, but that omits any proprietary information in the contracts for the sale or management of the nursing home, and any home addresses, social security numbers, or other personal information of any proposed owner, principal, or interested party. A summary prepared by the applicant may only be used for the purposes of posting information concerning the application on the department's Internet website pursuant to paragraph (1) of subsection d. of this section.]
b. Information submitted pursuant to subsection a. of this section or subsection a. of section 3 of this act by an applicant for transfer of ownership of a nursing home shall not be used in any adverse licensure action or disciplinary action against the applicant.
c. Approval of a transfer of ownership of a nursing home is contingent upon:
(1) a review of the applicant's history of disciplinary actions assessed in connection with any other facility owned, operated, or managed by the proposed owners and principals in New Jersey, and a determination based on that review that approval of the transfer of ownership will not present a material risk to the health, safety, or welfare of residents of the nursing home that is the subject of the transfer application; and
(2) payment of all outstanding and issued Medicaid audit claims and State penalties issued by the department against the current owner, unless such claims remain under appeal, in which case, if the claim remains under appeal, the applicant shall submit written verification that either the applicant or the current owners of the nursing home will assume responsibility for payment of such audit recoveries and State penalties at the conclusion of the appeal.
d. (1) [A] The department shall post on its Internet website no later than 30 days after the date the department receives the application:
(a) a copy of each transfer of ownership application [, or a summary of the application prepared by the applicant that includes the names of the proposed owners, principals, and interested parties] [, shall be published on the department's Internet website no later than 30 days after the date the department receives the application]; provided that the department shall redact the materials to the extent necessary to ensure that no proprietary information in the contracts for the sale or management of the nursing home, and no home addresses, social security numbers, or other personal information of any proposed owner, principal, or interested party, is included in the materials published on the department's Internet website; and
(b) a copy of the applicant's organizational chart submitted pursuant to subparagraph (c) of paragraph (3) of subsection a. of this section.
(2) Each application for the transfer of ownership of a nursing home shall be subject to a public comment period that shall commence not less than 30 days after the date the application is received by the department, and which comment period shall remain open for a period of not less than 30 days. The department shall establish a procedure for acknowledging receipt of public comments submitted. The text of comments submitted on a transfer of ownership application shall not be published on the department's Internet website, but shall be considered a government record pursuant to P.L.1963, c.73 (C.47:1A-1 et seq.) or P.L.2001, c.404 (C.47:1A-5 et al.).
e. The Department shall complete review of any transfer of ownership application submitted pursuant to subsection a. of this section no later than 120 days after the date the application is received. If a transfer of ownership application has been reviewed and deemed acceptable, the department shall send an approval letter to the applicant.
f. Within five days after the transaction has been completed, the applicant shall submit to the department certification of closing from an attorney or a notarized letter from the applicant stating the date on which the transaction occurred, along with an executed bill of sale or assignment. To facilitate the timely transfer of Medicare and Medicaid provider numbers, the department shall issue the new license to the applicant no later than 30 days after the date the notice is received by the department.
g. No nursing home may delegate substantial management control of the nursing home's operations to a third party entity without providing prior written notice to the department. The notice provided by the owners of the facility to the department shall include:
(1) a copy of the management agreement;
(2) (a) an organizational chart of the third party entity's proposed management team for the nursing home as well as all parent corporations, wholly-owned subsidiaries, and related parties; and unrelated parties to the third party entity that will or are expected to provide a service, a facility, or supplies to the nursing home in the coming year and that will or are expected to be paid more than $200,000 by the nursing home in the coming year; and
(b) a consolidated financial statement for the third party entity that meets the requirements of subsection c. of section 3 of P.L.2021, c.95 (C.26:2H-7.26);
(3) the names and addresses of all owners, principals, and interested parties of the third party entity; and
(4) a list of any other licensed health care facilities owned, operated, or managed by the third party entity in any state or territory of the United States or in the District of Columbia for the preceding three years, along with [owner-certified] a consolidated financial [statements] statement that meets the requirements of subsection c. of section 3 of P.L.2021, c.95 (C.26:2H-7.26) for each such facility for the last three years during which the facility was owned, operated, or managed by the third party entity. If the third party entity owned, operated, or managed facilities located outside New Jersey in the preceding three years, the application shall include disclosures by the third party entity of any enforcement actions imposed during that period of time against any facility owned, operated, or managed by the third party entity in any jurisdiction.
h. (1) Upon request by the Commissioner of Health and subject to the provisions of P.L.1968, c.266 (C.52:9M-1 et seq.), the State Commission of Investigation shall undertake an investigation of one or more nursing homes in the State or the entities owning, operating, or managing one or more nursing homes in the State, provided that, if the commission determines that the request for an investigation from Commissioner of Health exceeds the commission's capacity to perform such investigations, the commission may advise the Commissioner of Health as to any requests upon which it finds itself unable to proceed. The State Commission of Investigation may, at any time, submit to the Governor, the Commissioners of Health and Human Services, and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), the Legislature, recommendations for administrative or legislative action to improve oversight and transparency in nursing homes.
(2) The State Auditor shall undertake a review of the oversight of nursing homes by the Department of Health and the Department of Human Services at least once every three years, with particular focus on compliance with federal inspection requirements, responses to complaints and response times in reviewing complaints, and actions taken to follow up on violations affecting the health, safety, or welfare of residents.
i. As used in sections 2 through 4 of this act:
"Immediate family member" means a spouse, natural parent, child, sibling, first cousin, aunt, uncle, adopted child, adoptive parent, stepparent, stepchild, stepsister, stepbrother, father-in-law, mother-in-law, sister-in-law, brother-in-law, son-in-law, daughter-in-law, grandparent, and grandchild.
"Interested party" means any individual or entity with an interest of one percent or more but less than five percent in an applicant to receive a transfer of ownership of a nursing home or the land or other real property on which a nursing home is located.
"Principal" means any individual or entity with an interest of five percent or more in an applicant to receive a transfer of ownership of a nursing home or the land or real property on which a nursing home is located.
"Related party" means an organization that, either directly or through contracts with a third party entity exercising substantial management control over the nursing home, will or is expected to provide a service, facility, land or other real property, or supplies to a licensed nursing home that is the subject of a transfer of ownership application, or that, either directly or through contracts with a third party entity exercising substantial management control over the nursing home, will or is expected to otherwise do business with a nursing home that is the subject of a transfer of ownership application: in which organization the nursing home, or any proposed owner or principal of the nursing home, or a third party entity to which substantial management control over the nursing home is to be delegated or any owner or principal of the third party entity, has an ownership or control interest of five percent or more; which is an organization in which an immediate family member of an owner or principal of the applicant for transfer of ownership of the nursing home, or an immediate family member of an owner or principal of a third party entity to which substantial management control over the nursing home is to be delegated, is an owner or principal; or which organization is under common ownership or control with the applicant or third party entity, as defined in 42 CFR s.413.17(b). "Related party" may include, but shall not be limited to: home offices; management organizations; owners of real estate; entities that provide staffing, therapy, pharmaceutical, marketing, administrative management, consulting, and insurance services; providers of supplies and equipment; financial advisors and consultants; banking and financial entities; and all parent companies, holding companies, and sister organizations.
"Substantial management control" means the primary authority to direct the operation and administration of a nursing home, including, but not limited to, exercising control over resident admissions, room assignments, staff hiring, staff scheduling, staff assignments, personnel issues, billing, purchasing, managing vendor contracts, establishing and enforcing operational protocols and procedures, resident safety, infection control, communicating with and reporting to governmental and other entities, and ensuring compliance with State and federal requirements concerning the operation of the nursing home.
(cf: P.L.2021, c.95, s.2)
2. Section 3 of P.L.2021, c.95 (C.26:2H-7.26) is amended to read as follows:
3. a. A transfer of ownership application submitted to the Department of Health pursuant to subsection a. of section 2 of this act shall meet the following requirements:
(1) In the case of an application to transfer controlling interest in a nursing home to an individual or entity that has never previously owned or operated a licensed health care facility in New Jersey, or for any application to transfer controlling interest in a nursing home that is submitted within six months after a prior application for transfer of controlling interest in the nursing home was approved, the applicant shall:
(a) submit a projection of profits and losses for the next three years and a capital budget projection for the next three years;
(b) disclose any licensed health care facilities owned, operated, or managed by the proposed owners and principals in any state or territory of the United States or in the District of Columbia in the preceding three years, along with [owner-certified financial statements] a consolidated financial statement that meets the requirements of subsection c. of this section for each such facility for the last three years during which the facility was owned, operated, or managed by the owner or principal and disclosures by the applicant as to any enforcement actions imposed during that period of time against any facility owned, operated, or managed by the applicant in any jurisdiction, as well as a consolidated financial statement that meets the requirements of subsection c. of this section for the prior year for all related parties of the applicant;
(c) hold a public hearing on the application no earlier than 30 days after the date the application is received by the department. Notice of the public hearing shall be published at least seven days in advance of the public hearing on the Internet websites of the department, the nursing home, and the applicant, as well as in at least one newspaper published in each county, if any newspapers are published therein. The nursing home shall invite the Attorney General and the Commissioner of Health, or their designated representatives, to attend the hearing. The transfer of ownership application may not be approved until after the public hearing is completed; and
(d) consistent with the requirements of subsection b. of this section, submit to a criminal history record background check of each proposed owner and principal;
(2) In the case of an application to transfer controlling interest in a nursing home to an individual or entity that has previously owned or operated a licensed health care facility in New Jersey, the applicant shall:
(a) submit a projection of profits and losses for the next three years and a capital budget projection for the next three years; and
(b) disclose any licensed health care facilities owned, operated, or managed by the proposed owners and principals in any state or territory of the United States or in the District of Columbia in the preceding year, along with [owner-certified financial statements] a consolidated financial statement that meets the requirements of subsection c. of this section for each facility owned, operated, or managed by the proposed owners and principals in New Jersey for the last year during which the facility was owned, operated, or managed by owner or principal, as well as a consolidated financial statement that meets the requirements of subsection c. of this section for the prior year for all related parties of the applicant;
(3) In the case of an application to transfer an interest of five percent or more, but less than a controlling interest, in a nursing home to an individual or entity that has never previously owned or operated a licensed health care facility in New Jersey, the applicant shall:
(a) disclose any licensed health care facilities owned, operated, or managed by the proposed owners and principals in any state or territory of the United States or in the District of Columbia in the preceding year, submit a consolidated financial statement that meets the requirements of subsection c. of this section for each such facility for the last year during which the facility was owned, operated, or managed by the owner or principal, and disclose any enforcement actions imposed during the preceding year against any facility owned, operated, or managed by the applicant in any jurisdiction, as well as a consolidated financial statement that meets the requirements of subsection c. of this section for the prior year for all related parties of the applicant; and
(b) consistent with the requirements of subsection b. of this section, submit to a criminal history record background check of each proposed owner and principal; [and]
(4) In the case of an application to transfer an interest of five percent or more, but less than a controlling interest, in a nursing home to an individual or entity that has previously owned or operated a licensed health care facility in New Jersey, the applicant shall disclose any licensed health care facilities owned, operated, or managed by the proposed owners and principals in any state or territory of the United States or in the District of Columbia in the preceding year, submit a consolidated financial statement that meets the requirements of subsection c. of this section and disclose any enforcement actions imposed during the preceding year against any facility owned, operated, or managed by the applicant in any jurisdiction, as well as a consolidated financial statement that meets the requirements of subsection c. of this section for the prior year for all related parties of the applicant; and
(5) In the case of an application to transfer an interest of less than five percent in a nursing home, the applicant shall:
(a) disclose any licensed health care facilities owned, operated, or managed by the proposed owners and principals in any state or territory of the United States or in the District of Columbia in the preceding year; and
(b) if the applicant has never previously owned or operated a licensed health care facility in New Jersey, consistent with the requirements of subsection b. of this section, submit to a criminal history record background check of each proposed owner and principal.
b. (1) An applicant for a transfer of ownership of a nursing home who is required to complete a criminal history record background check pursuant to subsection a. of this section shall submit to being fingerprinted in accordance with applicable State and federal laws, rules, and regulations. An applicant shall bear the cost for the criminal history record background check, including all costs of administering and processing the check.
(2) For the purposes of subsection a. of this section, the department is authorized to exchange fingerprint data with and receive criminal history record background information from the Division of State Police and the Federal Bureau of Investigation consistent with the provisions of applicable federal and State laws, rules, and regulations. Upon receipt of such notification, the department shall make a determination as to whether transferring all or part of the ownership of a nursing home to the applicant would constitute a material risk to the health, safety, or welfare of residents of the nursing home, which shall include determining whether any owner or principal has a prior conviction involving fraud or any other criminal offense of a financial nature, or a prior conviction that may bear on the health and safety of residents of a long-term care facility, including, but not limited to, a prior conviction involving abuse, neglect, or exploitation of any person.
(3) The Division of State Police shall promptly notify the department in the event that an individual who was the subject of a criminal history record background check conducted pursuant to subsection a. of this section is convicted of a crime or offense in this State after the date the background check was performed. Upon receipt of that notification, the department shall make a determination regarding the continued eligibility for the individual to be an owner or principal of a nursing home.
c. A consolidated financial statement required pursuant to subsection a. of this section, subsection g. of section 2 of P.L.2021, c.95 (C.26:2H-7.25), or section 3 of P.L.2021, c.457 (C.26:2H-46.3), shall meet the following requirements:
(1) the statement shall be audited by a certified public accountant in accordance with generally accepted accounting principles and with the Financial Accounting Standards Board's financial reporting requirements, with financial statements prepared using the accrual basis; and
(2) the statement shall include:
(a) a balance sheet detailing the assets, liabilities, and net worth at the end of the reporting entity's fiscal year;
(b) a statement of income, expenses, and operating surplus or deficit for the annual fiscal period, and a statement of ancillary utilization and patient census;
(c) a statement detailing patient revenue by payer, including, but not limited to, Medicare, NJ FamilyCare, and other payers, and revenue center;
(d) a statement of cash flows, including, but not limited to, ongoing and new capital expenditures and depreciation; and
(e) a combined financial statement that includes all entities reported in the consolidated financial statement, unless the reporting entity is prohibited from including a combined financial statement in a consolidated financial statement pursuant to State or federal law or regulation or national accounting standard, in which case the reporting entity shall disclose to the department the applicable State or federal law or regulation or national accounting standard.
(cf: P.L.2021, c.95, s.3)
3. Section 1 of P.L.1977, c.237 (C.26:2H-32) is amended to read as follows:
1. The following words or phrases, as used in P.L.1977, c.237 (C.26:2H-32 et seq.), shall have the following meanings, unless the context otherwise requires:
a. "Nursing home" means a [facility providing therein nursing care to persons who are sick, invalid, convalescing, or who have disabilities, in addition to providing lodging and board or health-related service, or any combination of the foregoing and in addition thereto, providing nursing care and health-related service, or either of them, to persons who are not occupants of the facility] nursing home licensed pursuant to P.L.1971, c.136 (C.26:2H-1 et seq.).
b. "Affiliate" means (1) with respect to a partnership, each partner thereof; (2) with respect to a corporation, each officer, director, principal stockholder, or controlling person thereof; (3) with respect to a natural person, (a) each member of said person's immediate family, (b) each partnership and each partner thereof of which said person or any affiliate of said person is a partner, and (c) each corporation in which said person or any affiliate of said person is an officer, director, principal stockholder, or controlling person.
c. "Controlling person" of any corporation, partnership, or other entity means any person who has the ability, directly or indirectly, to direct or cause the direction of the management or policies of said corporation, partnership, or other entity.
d. "Immediate family member" [of any person includes] means [each] a spouse, natural parent, child, [spouse, brother, sister,] sibling, first cousin, aunt [and] , uncle [of such person, whether such relationship arises by birth, marriage or adoption, as well as the person's domestic partner or partner in civil union of that person as defined in section 3 of P.L.2003, c.246 (C.26:8A-3) or section 2 of P.L.2006, c.103, (C.37:1-29) and the partner's parent and adult child] adoptive sibling, adoptive parent, stepparent, stepchild, stepsister, stepbrother, father-in-law, mother-in-law, sister-in-law, brother-in-law, son-in-law, daughter-in-law, grandparent, and grandchild.
e. "Principal stockholder" of a corporation means any person who beneficially owns, holds or has the power to vote, 10 1[%] percent1 or more of any class of securities issued by said corporation.
f. "Interested party" means any individual or entity with an interest of one percent or more but less than five percent in a nursing home or the land or other real property on which a nursing home is located.
g. "Principal" means any individual or entity with an interest of five percent or more in a licensed nursing home or the land or real property on which a nursing home is located.
h. "Related party" means an organization, either directly or through contracts with a third party entity exercising substantial management control over the nursing home, providing a service, facility, land or other real property, or supplies to a licensed nursing home, or otherwise doing business with the nursing home either directly or through contracts with a third party entity exercising substantial management control over the nursing home: in which organization the nursing home, or any owner or principal of the nursing home, or a third party entity exercising substantial management control over the nursing home or any owner or principal of the third party entity, has an ownership or control interest of five percent or more; which is an organization in which an immediate family member of an owner or principal of the nursing home, or an immediate family member of an owner or principal of a third party entity exercising substantial management control over the nursing home, is an owner or principal; or which organization is under common ownership or control with the nursing home or third party entity, as defined in 42 CFR s.413.17(b). "Related party" may include, but shall not be limited to: home offices; management organizations; owners of real estate; entities that provide staffing, therapy, pharmaceutical, marketing, administrative management, consulting, and insurance services; providers of supplies and equipment; financial advisors and consultants; banking and financial entities; and all parent companies, holding companies, and sister organizations.
i. "Substantial management control" means the primary authority to direct the operation and administration of a nursing home, including, but not limited to, exercising control over resident admissions, room assignments, staff hiring, staff scheduling, staff assignments, personnel issues, billing, purchasing, managing vendor contracts, establishing and enforcing operational protocols and procedures, resident safety, infection control, communicating with and reporting to governmental and other entities, and ensuring compliance with State and federal requirements concerning the operation of the nursing home.
(cf: P.L.2017, c.131, s.97)
4. Section 2 of P.L.1977, c.237 (C.26:2H-33) is amended to read as follows:
2. Every nursing home operating in the State shall, within 90 days after the end of its fiscal year, file an annual report with the State Commissioner of Health. Such annual report shall be in such form and shall contain such information as shall be prescribed by the commissioner, including the following:
a. [A balance sheet of the nursing home as of the end of such fiscal year, setting forth assets and liabilities at such date including all capital, surplus, reserve, depreciation and similar accounts;] (deleted by amendment, P.L. , c. ) (pending before the Legislature as this bill)
b. [A statement of operations of the nursing home for such fiscal year, setting forth all revenues, expenses, taxes, extraordinary items and other credits or charges;] (deleted by amendment, P.L. , c. ) (pending before the Legislature as this bill)
c. The name and address of each of the following persons:
(1) The operator of the nursing home and any third party entities other than the owners or principals of the nursing home exercising substantial management control over the nursing home;
(2) Any person who, directly or indirectly, beneficially owns any interest in the land on which the nursing home is located;
(3) Any person who, directly or indirectly, beneficially owns any interest in the building in which the nursing home is located;
(4) Any person who, directly or indirectly, beneficially owns a [10%] five percent or greater interest in any mortgage, note, deed of trust, or other obligation secured in whole or in part by the land on which or building in which the nursing home is located;
(5) Any person who directly or indirectly, has any interest as lessor or lessee in any lease or sublease of the land on which or the building in which the nursing home is located;
(6) Any person who, directly or indirectly, beneficially owns a [10%] five percent or greater interest in any mortgage, note, deed of trust, or other obligation which, although not secured by the land on which or building in which the nursing home is located, is considered an outstanding liability on the books of the nursing home and was executed to finance directly or indirectly the purchase of the nursing home, land, building, lease, or sublease pertaining thereto;
(7) Any person who owns or operates a sister company, holding company, or parent company, or who is a member of the board of trustees or a member of the board of directors of the nursing home; and
(8) Any person who has ownership interest in a private equity pool that funds the nursing home;
d. If the nursing home or any person named in response to subsection c., h., or i. of this section is a partnership, then the name and address of each partner;
e. If the nursing home or any person named in response to subsection c., h., or i. of this section is a corporation, other than a corporation whose shares are traded on a national securities exchange or a commercial bank, savings bank, or savings and loan association, then the name and address of each officer, director, principal shareholder, and controlling person of such corporation;
f. If any corporation named in response to subsection c., h., or i. of this section is a corporation whose shares are traded on a national securities exchange or which is a commercial bank, savings bank, or savings and loan association, then the name and address of the principal executive officers and each director, principal stockholder, and controlling person of said corporation;
g. If the nursing home paid or received an aggregate of $2,500.00 or more during the fiscal year in connection with transactions with any person named in response to subsections c., d., e., or f., or any affiliate of said person, a description of the transactions, naming the parties thereto and describing the relationships which require the transactions to be described and the goods, services, payment, or other consideration received by each party to the transactions;
h. Information identifying 100 percent of the current owners of the nursing home, including all principals and interested parties and including 100 percent of the owners, principals, and interested parties in any third party entity identified as a principal or interested party in the nursing home;
i. Information identifying 100 percent of the current owners of any third party entity exercising substantial management control over the nursing home, including all principals and interested parties and including 100 percent of the owners, principals, and interested parties in any third party entity identified as a principal or interested party in the third party entity exercising substantial management control over the nursing home;
j. A copy of the nursing home's organizational chart and an organizational chart for any third-party entity exercising substantial management control over the nursing home, which organizational chart shall include, as applicable:
(1) parent corporations and wholly-owned subsidiaries;
(2) related parties; and
(3) unrelated parties that provided a service, a facility, or supplies to the nursing home in the preceding year that were paid more than $200,000 by the nursing home in the preceding year;
k. A consolidated financial statement for the nursing home, a consolidated financial statement for any third party entity exercising substantial management control over the nursing home, a consolidated financial statement for any person described in paragraphs (2) through (6) of subsection c. of this section, which consolidated financial statement shall be limited to the person's interest in the nursing home for which reporting is required to paragraph (2), (3), (4), (5), or (6) of subsection c. of this section, as applicable, and consolidated financial statements for each related party, which consolidated financial statements shall meet the following requirements:
(1) the statement shall be audited by a certified public accountant in accordance with generally accepted accounting principles and with the Financial Accounting Standards Board's financial reporting requirements, with financial statements prepared using the accrual basis; and
(2) the statement shall include:
(a) a balance sheet detailing the assets, liabilities, and net worth at the end of the reporting entity's fiscal year;
(b) a statement of income, expenses, and operating surplus or deficit for the annual fiscal period, and a statement of ancillary utilization and patient census;
(c) a statement detailing patient revenue by payer, including, but not limited to, Medicare, NJ FamilyCare, and other payers, and revenue center;
(d) a statement of cash flows, including, but not limited to, ongoing and new capital expenditures and depreciation; and
(e) a combined financial statement that includes all entities reported in the consolidated financial statement, unless the reporting entity is prohibited from including a combined financial statement in a consolidated financial statement pursuant to State or federal law or regulation or national accounting standard, in which case the reporting entity shall disclose to the department the applicable State or federal law or regulation or national accounting standard; and
l. A copy of any lease agreements for the nursing home's use of land, buildings, facilities, or other real property.
m. For the purposes of subsection k. of this section, if a nursing home is part of a chain or group of nursing homes that are owned, operated, or substantially controlled by the same holding or parent company, the holding or parent company may submit a single consolidated financial statement for all nursing homes that the holding or parent company owns, operates, or substantially controls in New Jersey.
(cf: P.L.1977, c.237, s.2)
5. Section 4 of P.L.1977, c.237 (C.26:2H-35) is amended to read as follows:
4. a. Any person, firm, association, partnership, or corporation who fails to file a statement as required by this act or willfully files a false statement shall be liable to a penalty of not less than $10.00 nor more than $100.00 for each day that such failure continues or such false statement remains uncorrected. The penalties prescribed and authorized by this act shall be recovered in a summary civil proceeding brought in the name of the State in the Superior Court pursuant to ["the penalty enforcement law" (N.J.S.2A:58-1 et seq.)] "Penalty Enforcement Law of 1999," P.L.1999, c.274 (C.2A:58-10 et seq.).
b. In addition to the penalties provided in subsection a. of this section, the Department of Health may curtail the admissions for new residents in the case of a person, firm, association, partnership, or corporation who fails to file a statement as required by this act or willfully files a false statement, which curtailment may continue until corrective action is taken by the violator.
(cf: P.L.1991, c.91, s.288)
6. (New section) a. Each nursing home shall, at a minimum, post and maintain on its Internet website the information required to be reported pursuant to subsection h. of section 2 of P.L.1977, c.237 (C.26:2H-33), the organizational chart for the nursing home and any third party entity exercising substantial management control over the nursing home required pursuant to subsection j. of section 2 of P.L.1977, c.237 (C.26:2H-33), the nursing home's most recent consolidated financial statement required pursuant to subsection k. of section 2 of P.L.1977, c.237 (C.26:2H-33), the most recent consolidated financial statements required pursuant to subsection k of section 2 of P.L.1977, c.237 (C.26:2H-33) for any third party entity exercising substantial management control over the nursing home, and the most recent consolidated financial statements required pursuant to subsection k. of section 2 of P.L.1977, c.237 (C.26:2H-33) for all related parties.
b. The department shall:
(1) include on its Internet website a link to the page where each nursing home has posted the information required pursuant to subsection h. of section 2 of P.L.1977, c.237 (C.26:2H-33), the organizational charts required pursuant to subsection j. of section 2 of P.L.1977, c.237 (C.26:2H-33), and the consolidated financial statements required pursuant to subsection k. of section 2 of P.L.1977, c.237 (C.26:2H-33); and
(2) make all information submitted to the department pursuant to subsection h. of section 2 of P.L.1977, c.237 (C.26:2H-33) , all organizational charts submitted to the department pursuant to subsection j. of section 2 of P.L.1977, c.237 (C.26:2H-33), and all consolidated financial statements submitted to the department pursuant to subsection k. of section 2 of P.L.1977, c.237 (C.26:2H-33) available to the public upon request.
7. Section 3 of P.L.2021, c.457 (C.26:2H-46.3) is amended to read as follows:
3. a. The department shall undertake a review of reporting requirements for nursing homes and shall take steps to standardize and consolidate the reporting requirements for the purpose of: reducing the administrative demand on nursing homes in complying with reporting requirements; developing updated standardized data reporting requirements; and improving the utility of the reported data and the ability to share the data across systems, including, as appropriate, systems maintained by other State departments and agencies, county and local agencies, and federal authorities. The department's review shall include:
(1) identifying and eliminating duplicative reporting;
(2) establishing standardized formats, requirements, protocols, and systems for data reporting, which may include requiring nursing homes to report data in machine-readable formats to facilitate the processing and analysis of reported data;
(3) establishing a centralized, cross-agency workgroup to monitor nursing home reporting;
(4) assessing State health information technology needs to support technology-enabled and data-driven regulatory oversight across State departments and agencies, anticipate potential uses for the enhanced technologies and systems, enable systems to readily accept and analyze additional data metrics required pursuant to subsection b. of this section, and identify opportunities to centralize and modernize State health data infrastructure, processes, and analytic capabilities;
(5) assessing nursing home health information technology needs to support population health management, interoperability, and modernized reporting requirements; and
(6) identifying and applying for federal funding to support health information technology infrastructure development.
b. (1) [The department shall require all nursing homes to post on their Internet websites annual owner-certified financial statements along with the nursing home's most recent cost reports submitted to the federal Centers for Medicare and Medicaid Services. The department shall include on its Internet website a link to the page where each nursing home's certified financial statements and cost reports are posted. Nursing homes that are part of a health care system may post financial statements and cost reports pursuant to this paragraph that aggregate the financial data across all nursing homes that are a part of that health care system. A nonprofit nursing home that posts a copy of its most recent Internal Revenue Service Form 990 on its Internet website shall be deemed to have met the requirement for the nursing home to post an owner-certified financial statement on its Internet website pursuant to this paragraph, and the nursing home's posted Internal Revenue Service Form 990 shall be considered an owner-certified financial statement for the purposes of this paragraph and subparagraph (d) of paragraph (1) of subsection f. of this section.] (deleted by amendment, P.L. , c. ) (pending before the Legislature as this bill)
(2) The department shall require [all] each nursing [homes] home to:
(a) participate in the National Health Care Safety Network's Long-term Care Facility Component;
(b) complete the network's long-term care facility annual facility survey; and
(c) participate in the network's long-term care facility monthly reporting plan, including:
(i) the healthcare-associated infection reporting modules for urinary tract infections, the laboratory-identified event module for Clostrum difficile (C.diff) infection and multidrug-resistant organisms, and prevention measures; and
(ii) the monthly reporting plan for prevention process measures, including hand hygiene, gloves, and gown adherence.
c. The department may develop additional data reporting requirements for nursing homes as are necessary to improve transparency and facilitate the department's ability to oversee and regulate operations in nursing homes, including, but not limited to, data related to occupancy, operating expenses and other appropriate financial metrics, and utilization and staffing data. In developing additional reporting requirements pursuant to this subsection, the department shall solicit feedback from nursing homes, advocacy groups for nursing home residents and their families, the New Jersey Long-Term Care Ombudsman, and Medicaid managed care organizations concerning proposed new data metrics, methods of maximizing the efficiency of data collection and specification, minimizing duplicative data reporting, and identifying ways to consolidate, automate, or streamline the data required to be reported by State and federal agencies and managed care organizations.
d. The department shall establish centralized State protocols for nursing home communications to reduce duplicative outreach and enhance information sharing capabilities.
e. The department shall require nursing homes to:
(1) post on their Internet websites a link to the dashboard developed and maintained by the department pursuant to paragraph (1) of subsection f. of this section; and
(2) designate a staff person who shall be responsible for responding to questions from the public concerning the nursing home, including questions about the nursing home's policies, procedures, and operations. The contact information for members of the public to direct questions and request information shall be posted on the nursing home's Internet website.
f. (1) The department shall develop, make available on its Internet website, and update at least quarterly, a data dashboard that provides a separate page or listing for each nursing home licensed in the State with links to the sites where information and data relevant to the nursing home may be found, as well as a description of the data and information that is accessible through each link. The data dashboard shall be searchable by nursing home. The data and information links available through the dashboard shall include, at a minimum, for each nursing home:
(a) the nursing home's star rating issued by the federal Centers for Medicare and Medicaid Services;
(b) the total number of complaints involving the nursing home, the number and nature of substantiated complaints involving the nursing home, the number of open investigations of complaints involving the nursing home, and the total number of outstanding complaints involving the nursing home that have not been investigated or resolved;
(c) the dates and results of inspections and surveys of the nursing home by the Department of Health, the Department of Human Services, and the federal Centers for Medicare and Medicaid Services, including links to any deficiencies or violations for which the nursing home was cited and to any corrective action plans in place at the nursing home;
(d) a link to the website where each nursing [home's certified financial statements and the nursing home's cost reports submitted to the federal Centers for Medicare and Medicaid Services are posted] home has posted its ownership information, organizational charts, and consolidated financial statements as required under subsection a. of section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill);
(e) general staffing levels at the nursing home and, to the extent feasible, rates of compliance with mandatory staffing ratios;
(f) the frequency with which antipsychotic medication was administered to residents of the nursing home;
(g) the number of residents who developed a pressure ulcer, including the number of residents who developed multiple pressure ulcers;
(h) the number of each type of facility-acquired infection at the nursing home as reported to the National Health Care Safety Network's Long-term Care Facility Component pursuant to paragraph (2) of subsection b. of this section; and
(i) such other data as the department determines appropriate to allow the public to make informed choices when evaluating and selecting a nursing home.
(2) The department shall prepare and publish on its Internet website annual reports on New Jersey's nursing home system of care.
(3) For the purposes of making available to the public the data described in subparagraph (h) of paragraph (1) of this subsection, the department shall: request from the National Healthcare Safety Network, on a quarterly basis, data concerning the number of infections reported to the network by New Jersey nursing homes pursuant to paragraph (2) of subsection b. of this section; make the data available on the department's Internet website; and update the data at least quarterly using the most current data obtained from the National Healthcare Safety Network. The data shall provide details concerning the number of reported infections, by infection type, for each nursing home licensed in the State. The department shall additionally provide on its Internet website data concerning the Statewide and national averages for each type of reported infection in nursing homes.
(cf: P.L.2021, c.457, s.3)
8. Section 3 of P.L.2020, c.89 (C.30:4D-7cc) is amended to read as follows:
3. a. The Commissioner of Human Services shall submit recommendations to the Legislature, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), for legislative approval of any reimbursement rate increases as may be needed to comply with minimum wage requirements for long-term care facility direct care staff as provided in subsection i. of section 5 of P.L.1966, c.113 (C.34:11-56a4). The commissioner may recommend that increases for nursing homes be tied to improvements in specific quality and safety metrics.
b. No later than 90 days after the effective date of this act, the Commissioner of Human Services shall conduct a review of the Department of Human Services' Medicaid value-based payment strategy, including the Quality Incentive Payment Program, to ensure incentives provided under the strategy focus on priority metrics for quality improvement, and shall review and determine whether incentives are an effective means of driving improvements in quality of care and resident and staff safety in nursing homes.
c. (1) The Commissioner of Human Services shall establish a direct care ratio reporting and rebate requirement, which shall take effect no later than July 1, 2021, pursuant to which nursing homes shall be required to report total revenues collected, along with the portion of revenues that are expended on direct care staff wages, other staff wages, taxes, administrative costs, investments in improvements to the facility's equipment and physical plant, profits, and any other factors as the commissioner shall require. At the commissioner's discretion, the reporting requirements of this paragraph may be met by the nursing home submitting an audited consolidated financial statement that meets the requirements of subsection k. of section 2 of P.L.1977, c.237 (C.26:2H-33).
(2) The direct care ratio shall require 90 percent, or such higher percentage as the commissioner may establish by regulation, of a facility's aggregate revenue in a fiscal year to be expended on the direct care of residents. The commissioner shall determine which components of the reporting requirements shall be attributed to direct patient care, administrative costs, and profits. The commissioner may adjust the components of the ratio as appropriate based on current financial information reported by nursing homes and overall performance by the nursing home related to patient safety and quality of care.
(3) The commissioner or an entity designated by the commissioner may conduct an audit of the financial information reported by nursing homes pursuant to this section to ensure the accuracy of the information reported and compliance with the requirements of this section, as well as to identify and recover any payments that exceed the allowed cost ratio for administrative costs and profits.
(4) In each case where the direct care loss ratio fails to substantially comply with the ratio requirement established pursuant to this subsection, the nursing home shall issue a pro rata dividend or credit to the State and to all individuals and entities making payments to the nursing home for resident services in an amount sufficient to assure that the aggregate amount paid for direct care staff wages, other staff wages, taxes, administrative costs, investments in improvements to the nursing home's equipment and physical plant, profits, and other factors, plus the amount of the dividends and credits, equals the mandatory ratio for the previous calendar year. The pro rata dividend or credit shall be equal to the percentage of payments made by the payor to the nursing home in the previous calendar year out of all payments made to the nursing home for services provided in the previous calendar year from all payment sources. All dividends and credits shall be distributed by June 30 of the year following the calendar year in which the ratio requirements were not satisfied.
(cf: P.L.2020, c.89, s.3)
9. This act shall take effect 60 days after the date of enactment.
STATEMENT
This bill revises certain reporting requirements for nursing homes.
Specifically, the bill requires nursing home owners and operators, as well as applicants for a transfer of ownership of a nursing home and third party entities exercising substantial management control over the nursing home, to provide an organizational chart identifying parent corporations, wholly-owned subsidiaries, related parties, and unrelated parties that provide a service, facility, or supplies to the nursing home that are paid $200,000 or more by the nursing home. In the case of an applicant for a transfer of ownership of a nursing home, these disclosures will be based on expectations with regard to services, facilities, supplies, and payments.
The bill defines "related party" to mean any organization, either directly or through contracts with a third party entity exercising substantial management control over the nursing home, providing or expected to provide a service, facility, or supplies to the nursing home or that otherwise, either directly or through contracts with a third party entity exercising substantial management control over the nursing home, does, or is expected to do, business with the nursing home: 1) in which organization an owner or principal of the nursing home, an applicant for transfer of ownership, or a third party managing entity, has an ownership or control interest of five percent or more; 2) which is an organization in which an immediate family member of the owner, principal, applicant, or third party managing entity is an owner or principal; or 3) which is an organization that is under common ownership or control with the owner, applicant, or third party entity.
The bill additionally revises the financial disclosures required for nursing home owners and operators, as well as applicants for a transfer of ownership and entities to which substantial management control over the nursing home would be delegated, to require the submission of a consolidated financial statement that:
1) is reviewed or audited by a certified public accountant in accordance with generally accepted accounting principles; and
2) includes: a balance sheet detailing the assets, liabilities, and net worth that the end of the reporting entity's fiscal year; a statement of income, expenses, and operating surplus or deficit for the annual fiscal period, and a statement of ancillary utilization and patient census; a statement detailing patient revenue by payer, including, but not limited to, Medicare, NJ FamilyCare, and other payers, and revenue center; a statement of cash flows, including, but not limited to, ongoing and new capital expenditures and depreciation; and a combined financial statement that includes all entities reported in the consolidated financial report.
For nursing homes that are part of a chain or group of nursing homes owned by the same parent or holding company, the parent or holding company will be permitted to submit a single consolidated financial statement for all nursing homes in New Jersey that are owned, operated, or controlled by the parent or holding company.
For applicants for a transfer of ownership and entities seeking to delegate management of a nursing home, this information will be included with certain materials that current law requires be provided to the Department of Health (DOH); in the case of a transfer of ownership application, the information will be made available on the DOH's Internet website, with certain personal identifying and proprietary material excised. For current nursing home owners and operators, the following materials are to be annually posted on the nursing home's internet website, submitted to the DOH, and linked through the DOH's website: 1) the nursing home's ownership information; 2) the financial information for the nursing home, for certain parties providing services to the nursing home, and for a third party exercising substantial management control over the nursing home; and 3) the organizational chart for the nursing home and for any third party exercising substantial management control over a nursing home.
Current law provides that the financial disclosures required for a transfer of ownership application vary, depending on whether the transfer involves a controlling interest in the nursing home and whether the prospective new owner has previously owned, operated, or managed a nursing home in New Jersey. The bill revises these requirements to require audited consolidated financial statements for all prospective new owners and operators who will be acquiring an interest of five percent or more in the nursing home. The bill removes an existing requirement for nursing homes to post the cost reports submitted to the federal Centers for Medicare and Medicaid Services on their Internet websites.
Current law allows nonprofit nursing homes to submit their Internal Revenue Service Form 990 in lieu of an owner-certified financial statement. The bill removes this language, thereby requiring nonprofit nursing homes to submit the same audited consolidated financial statements as are required of for profit nursing homes under the bill.
Current law requires nursing homes to annually disclose certain ownership interests of 10 percent or more in the nursing home's mortgage, note, deed of trust, or other obligation appearing on the nursing home's books. The bill makes these disclosures applicable to ownership interests of five percent or more.
The bill additionally requires nursing homes to annually provide to the DOH:
1) a disclosure of any person who owns or operates a sister company, holding company, or parent company, or who is a member of the board of trustees or the board of directors of the nursing home;
2) a disclosure of any person who has an ownership interest in a private equity pool that funds the nursing home;
3) information identifying 100 percent of the current owners of any third party entity exercising substantial management control over the nursing home, including all principals and interested parties and including 100 percent of the owners, principals, and interested parties in a third party entity identified as a principal or interested party; and
4) a copy of any lease agreements for the nursing home's use of land, buildings, facilities, or other real property.
Current law establishes certain monetary penalties for nursing homes that fail to make the required disclosures. The bill grants the DOH the authority to additionally curtail new admissions at a nursing home that fails to make the required disclosures or that files false disclosures.
The bill grants the Commissioner of Human Services the discretion to accept a consolidated financial statement that meets the requirements of the bill as satisfying the requirement that nursing homes report revenues and expenditures for the purposes of establishing and enforcing a direct care loss ratio, as required under current law.
