S1948

An Act concerning nursing home, amending P.L.2021, c.95, amending and supplementing P.L.1977, c.237, and supplementing P.L.2021, c.457 (C.26:2H-46.1 et seq.).

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 or acquire 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] entities, 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 agreements for real property and any 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.] (deleted by amendment, P.L. , c. ) (pending before the Legislature as this bill)

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 both in New Jersey and in any other jurisdiction, 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, Medicaid overpayments, and [State] State-issued 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 any such [audit] Medicaid recoveries and [State] State-issued penalties at the conclusion of the appeal.

(3) In the event that any Medicaid overpayments are identified after the transfer of ownership occurs, the prior owner and the new owner shall submit an affidavit to the department and to the State Comptroller identifying the responsible party for the Medicaid overpayments.

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) an organizational chart of the third party entity's proposed management team for the nursing home as well as all parent entities, 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;

(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] owner-certified financial [statements] statements 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 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 authority to direct the operation and administration of a nursing home, including, but not limited to, exercising control or authority over resident admissions, room assignments, number of beds, 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 ; provided that more than one entity may exercise authority that constitutes substantial management control. Regulations adopted pursuant to section 8 of P.L. , c. (C. ) (pending before the Legislature as this bill) may identify additional activities that constitute indicia of substantial management control.

(cf: P.L.2021, c.95, s.2)

2. 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] the same as is provided in section 1 of P.L.1975, c.397 (C.26:2H-29).

b. "Affiliate" means (1) with respect to a partnership, each partner thereof; (2) with respect to a corporation, each officer, director, principal [stockholder] shareholder, 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] shareholder, or controlling person, and (d) each limited liability company in which said person or any affiliate of said person is a member; and (4) with respect to a limited liability company, each member thereof.

c. "Controlling person" of any corporation, partnership, limited liability company, 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, limited liability company, 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] shareholder" of a corporation means any person who beneficially owns, holds or has the power to vote, [10%] five percent 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 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 organizationis 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 authority to direct the operation and administration of a nursing home, including, but not limited to, exercising control or authority over resident admissions, room assignments, the number of beds,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; provided that more than one entity may exercise authority that constitutes substantial management control. Regulations adopted pursuant to section 8 of P.L. , c. (C. ) (pending before the Legislature as this bill) may identify additional activities that constitute indicia of substantial management control.

j. “Private equity fund” means an investment vehicle that includes, but is not limited to, limited partnerships or other limited liability vehicles that invest in the assets, equity, or debt of a nursing home.

(cf: P.L.2017, c.131, s.97)

3. 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] 165days after the end of its fiscal year, file an annual report with the [State] Commissioner of Health, which report shall be immediately transmitted by the commissioner to the State Comptroller upon receipt. Such annual report shall be in such form and shall contain such information as shall be prescribed by the commissioner in consultation with the State Comptroller, [including] and shall include, at a minimum, 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;] A balance sheet of the nursing home as of the end of such fiscal year, setting forth assets, liabilities, and equity in accordance with notices and regulations issued or adopted pursuant to sections 8 and 9 of P.L. , c. (C. and C. ) (pending before the Legislature as this bill), as applicable, at such date including all capital, surplus, reserve, depreciation and similar accounts;

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;] A statement of operations of the nursing home for such fiscal year, setting forth all revenues, expenses, taxes, and other credits or charges, provided that:

(1) expenses shall be itemized to include amounts for each of the following:

(a) each lease payment, including the term of the lease, on any part of the land or buildings occupied by the nursing home and any other fees charged by the lessor;

(b) any loans or equipment leases in excess of $10,000 and the interest rate and any fees charged by the lender or lessor; and

(c) any contract in excess of $10,000 per year for any service, including, but not limited to, management, consulting, operations, leasing, staffing, dietary, laundry, physical therapy, occupational therapy, nursing, aides, billing, infection control, environmental, and maintenance services; and

(2) if the nursing home has a mortgage on the land or building it occupies, or both, it shall provide the name and address of the mortgagee, along with the amount, term, and interest rate on the mortgage and any other fees the mortgagee charges to the nursing home.

For the purposes of this subsection, the information required under paragraph (1) and paragraph (2) of this subsection may be presented in supplemental schedules subject to the auditing procedures applied in the audit of the financial statements;

c. The name and address of each of the following persons:

(1) The operator of 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 related party to the nursing home or who is a principal, 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 an ownership interest of five percent or more in a private equity fund that is invested in 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. (1) 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;

(2) If the nursing home or any person named in response to subsection c., h., or i. of this section is a limited liability company, then the name and address of each member;

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] shareholder, and controlling person of said corporation;

g. If the nursing home paid or received an aggregate of [$2,500.00] $10,000 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;

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 entities 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 annual fiscal period that were paid more than $200,000 by the nursing home in the annual fiscal period;

k. An owner-certified financial statement encompassing the nursing home, any third party entity exercising substantial management control over the nursing home, any person described in paragraphs (2) through (6) of subsection c. of this section, for whom the information provided in the owner-certified financial statement shall be limited to the person’s interest in the nursing home for which reporting is required pursuant to paragraph (2), (3), (4), (5), or (6) of subsection c. of this section, as applicable, and each related party. Theowner-certified financial statement required under this subsection shall meet the following requirements:

(1) the owner-certified financialstatement shall be prepared in accordance with generally accepted accounting principles in effect as of the date of the filing and audited by a certified public accountant in accordance with the generally accepted accounting standards in effect as of the date of the filing; and

(2) the owner-certified financial statement shall be submitted in accordance with the requirements of this section and any notices and regulations issued or adopted in accordance with sections 8 and 9 of P.L. , c. (C. and C. ) (pending before the Legislature as this bill), as applicable, and shallinclude:

(a) a balance sheet detailing the assets, liabilities, and equity at the end of the reporting entity’s fiscal year;

(b) a statement of revenues, expenses, and operating surplus or deficit for the annual fiscal period;

(d) a statement detailing patient charges by payer, including, but not limited to, Medicare, NJ FamilyCare, and other payers, by revenue center;

(e) a statement of cash flows, including, but not limited to, ongoing and new capital expenditures and depreciation;

(f) a combined financial statement that includes all entities reported in the owner-certified financial statement, unless the reporting entity is prohibited from including a combined financial statement in an owner-certified 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

(g) additional information, data, and documents related to receipts and expenditures by nursing homes as may be required by notices and regulations issued or adopted pursuant to sections 8 and 9 of P.L. , c. (C. and C. ) (pending before the Legislature as this bill), as applicable; and

l. A copy of any lease agreements for the nursing home’s use of land, buildings, facilities, or other real property.

m. Any nursing home, or authorized agent of a nursing home, that files an annual report pursuant to this section, shall certify under penalty of perjury that the information provided is accurate and complete. All information provided pursuant to this section shall be deemed a public record.

(cf: P.L.1977, c.237, s.2)

4. (New section) For the purposes of P.L.2021, c.457 (C.26:2H-46.1 et seq.), “owner-certified financial statement” means an owner-certified financial statement that meets the requirements of subsection k. of section 2 of P.L.1977, c.237 (C.26:2H-33). For the purposes of this section, the definitions set forth in section 1 of P.L.1977, c.237 (C.26:2H-32) are incorporated by reference.

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] comply with the requirements of P.L.1977, c.237 (C.26:2H-32 et seq.) or willfully files a false statement [shall] may be liable to a penalty of [not less than $10.00 nor more than $100.00] up to $200 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 comply with the requirements of P.L.1977, c.237 (C.26:2H- 32 et seq.) or willfully files a false statement, which curtailment may continue until corrective action is taken by the violator and approved by the department.

(cf: P.L.1991, c.91, s.288)

6. (New section) a. In the event a nursing home is under common ownership with one or more other nursing homes, the common owner shall submit one owner-certified financial statement pursuant to section 2 of P.L.1977, c.237 (C.26:2H-33) that consolidates the financial data across all nursing homes and related parties that are a part of that common ownership, which statement shall include the information required by subsection k. of section 2 of P.L.1977, c.237 (C.26:2H-33) for each nursing home under common ownership.

b. A nonprofit nursing home that files a copy of its most recent Internal Revenue Service Form 990 Public Inspection Copy with the Department of Health and the State Comptroller may be deemed, in accordance with notices and regulations adopted pursuant to sections 8 and 9 of P.L. , c. (C. and C. ) (pending before the Legislature as this bill), as applicable, to have satisfied all or part of the requirements of an owner-certified financial statement set forth under section 2 of P.L.1977, c.237 (C.26:2H-33).

7. (New section) The State Comptroller, in consultation with the Department of Health and the Department of Human Services, shall be authorized to monitor, review and audit owner-certified financial statements in accordance with P.L.2005, c.119 (C. 52:15B-1 et seq.), P.L.2007, c.52 (C.52:15C-1 et seq.), and the “Medicaid Program Integrity and Protection Act,” P.L.2007, c.58 (C.30:4D-53 et seq.). The State Comptroller may obtain information and testimony, issue reports, make referrals, and coordinate with and require the cooperation of State agencies in the same manner as permitted by P.L.2005, c.119 (C.52:15B-1 et seq.), P.L.2007, c.52 (C.52:15C-1 et seq.), and the “Medicaid Program Integrity and Protection Act,” P.L.2007, c.58 (C.30:4D-53 et seq.).

8. (New section) a. The Commissioner of Health, in consultation with the State Comptroller, shall promulgate rules and regulations, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), as the commissioner deems necessary to effectuate the purposes of this act.

b. The State Comptroller, in consultation with the Commissioner of Health and pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), shall promulgate rules and regulations setting forth the requirements of owner-certified financial statements as may be necessary to implement the provision of this act.

9. (New section) Notwithstanding the provisions of section 9 of P.L. , c. (C. ) (pending before the Legislature as this bill), the Commissioner of Health and the State Comptroller may issue notices to interested parties to implement the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill), which notices shall be valid for no more than one year from the effective date of sections 1 through 8 of P.L. , c. (C. ) (pending before the Legislature as this bill), provided that such interested parties are provided with notice of at least 30 days of the intent of either the Commissioner of Health or the State Comptroller to issue such notice.

10. This act shall take effect 90 days after the date of enactment, except that section 9of this act shall take immediately.

STATEMENT

This bill revises the reporting requirements for transfers of nursing home ownership and assignments of substantial management control over a nursing home to a third party entity.

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 entities and wholly-owned subsidiaries; principals that provide a service, facility, or supplies to the nursing home; 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.

For applications for transfer of ownership of a nursing home, the organizational chart is to be posted on the Department of Health’s (DOH’s) Internet website, along with a copy of the transfer of ownership application, which is currently required to be posted on the DOH’s website.

The bill removes a current provision of law that allows applicants for transfers of ownership to prepare and submit a summary of the application information that omits proprietary information and can be used for public disclosure purposes. The bill additionally removes a provision of current law that provides nothing in a transfer of ownership application may be used in an adverse licensure or disciplinary action against the applicant.

The bill revises the current requirements for approval of a transfer of ownership application to provide that approval is contingent on review of the applicant’s history of disciplinary actions involving facilities owned, operated, or managed by the applicant in both New Jersey and in any other jurisdiction; under current law, this review is limited to New Jersey facilities. Under current law, approval is additionally conditioned on payment of outstanding and issued Medicaid audit claims and penalties issued by the Department of Health (DOH); the bill adds as a condition of approval that there be payment of all Medicaid overpayments, and requires payment of any State-issued penalty, not just those issued by the DOH. The amended bill further specifies that, if any Medicaid overpayments are identified after the transfer of ownership occurs, the new owner will be required to submit an affidavit to the DOH and to the State Comptroller identifying the responsible party for the overpayments.

The bill revises the mandatory components of the annual reports nursing homes are required to submit to the DOH to additionally require balance sheets include information concerning equity, and statements of operations include specifically itemized expenses related to leases of land, buildings, and equipment, loans of equipment, and contracts in excess of $10,000 per year for any service, as well as details concerning any mortgagee for the land or building used by the nursing home. The reporting requirements will also include information concerning the owners and operators of related parties to the nursing home and entities other than a nonprofit organization that have an ownership interest of five percent or more in a private equity fund that is invested in the nursing home.

The bill revises the threshold for reporting certain interested party transactions from $2,500 per year to $10,000 per year. The bill further requires enhanced disclosure of the owners and principals of the owners, management companies, and related parties to a nursing home, including the owners and principals of holding and parent companies and subsidiaries, as well as limited liability companies.

The bill further revises the current financial disclosures required for nursing home owners and operators, to require the submission of an owner-certified financial statement that:

1) is reviewed or audited by a certified public accountant and performed in accordance with generally accepted accounting principles in effect the day the application or statement is submitted; and

2) includes: a balance sheet detailing the assets, liabilities, and equity the end of the reporting entity’s fiscal year; a statement of income, expenses, and operating surplus or deficit for the annual fiscal period; a statement of changes in equity; 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; a combined financial statement that includes all entities reported in the owner-certified financial statement; and any other information, data, and documents as may be required by the Commissioner of Health or the State Comptroller.

The bill specifies that an owner-certified financial statement required under P.L.2021, c.457 (C.26:2H-46.3 et seq.) is to meet the requirements for owner-certified financial statements established under the bill.

The bill further specifies that a health care system consisting of more than one nursing home will be required to submit owner-certified financial statements that consolidate the financial data across all nursing homes that are a part of that health care system, together with a statement of operations or income with respect to each nursing home in the health care system, which statements of operations or income may be submitted in a supplemental schedule. A nonprofit nursing home that files a copy of its most recent Internal Revenue Service Form 990 Public Inspection Copy with the DOH and the State Comptroller, and a nursing home that files with the DOH and the State Comptroller a cost report with an audited financial statement that has been submitted to the federal Centers for Medicare and Medicaid Services, may each be deemed to have satisfied all or part of the requirements of an owner-certified financial statement established under the bill.

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). The bill expands the disclosure requirements under current law to additionally reference limited liability companies, which will be required to make the required disclosures for each member of the limited liability company.

The bill revises a current requirement for nursing homes to submit certain information to the DOH within 90 days after the end of the fiscal year to require the information be submitted 150 days after the end of the fiscal year. The DOH will be required to immediately transmit submitted nursing home reports to the State Comptroller. All information submitted under the bill with regard to transfers of ownership, annual reporting, and delegations of substantial management control, is to be certified under penalty of perjury that the information is accurate and complete. All information submitted will additionally be deemed a public record.

The bill revises the current penalties that apply for failure to make a required report or for submitting false information. Current law authorizes a civil penalty of $10 to $100 per day for each day the report is not filed or corrected. The bill revises the civil penalty to up to $200 per day, makes the penalties discretionary, and authorizes the DOH to curtail resident admissions to the nursing home.

The bill provides that the State Comptroller, in consultation with the DOH and the Department of Human Services, will be authorized to monitor, review and audit owner-certified financial statements in accordance with certain existing statutory authorities, and will be authorized to obtain information and testimony, issue reports, make referrals, and coordinate with and require the cooperation of State agencies in the same manner as permitted under those existing statutory authorities.

The bill grants the DOH and the State Comptroller express authority to promulgate rules and regulations to implement the bill, and the authority to issue temporary notices to implement the bill, which notices will be valid for no more than one year after the date the bill is enacted.