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SB-650 Skilled nursing facilities.(2021-2022)

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Date Published: 04/28/2021 09:00 PM
SB650:v98#DOCUMENT

Amended  IN  Senate  April 28, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill
No. 650


Introduced by Senator Stern

February 19, 2021


An act to amend Section 1418 Sections 1418 and 128734 of, and to add Section 128734.1 to, the Health and Safety Code, relating to skilled nursing facilities.


LEGISLATIVE COUNSEL'S DIGEST


SB 650, as amended, Stern. Skilled nursing facilities.
Existing law requires an organization that operates, conducts, owns, or maintains a health facility, and the officers thereof, to make and file with the Office of Statewide Health Planning and Development specified reports relating to the facility’s finances, including, among other things, a balance sheet detailing the assets, liabilities, and net worth of the health facility at the end of its fiscal year.
This bill would require an organization that operates, conducts, owns, manages, or maintains a skilled nursing facility or facilities to prepare and file with the office an annual consolidated financial report that includes data from all operating entities, license holders, and related parties in which the organization has an ownership or control interest of 5% or more and that provides any service, facility, or supply to the skilled nursing facility. The bill would also require management companies and property companies that are not related by ownership or control to one of those organizations, but that contract with, or have entered into leases with, one of those organizations, to file an annual consolidated financial report. those organizations to submit copies of specified contractual agreements and leases. The bill would require the office to post those reports and related documents to its internet website.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 1418 of the Health and Safety Code is amended to read:

1418.
 As used in this chapter:
(a) “Long-term health care facility” means any facility licensed pursuant to Chapter 2 (commencing with Section 1250) that is any of the following:
(1) Skilled nursing facility.
(2) Intermediate care facility.
(3) Intermediate care facility/developmentally disabled.
(4) Intermediate care facility/developmentally disabled habilitative.
(5) Intermediate care facility/developmentally disabled-nursing.
(6) Congregate living health facility.
(7) Nursing facility.
(8) Intermediate care facility/developmentally disabled-continuous nursing.
(b) “Long-term health care facility” also includes a pediatric day health and respite care facility licensed pursuant to Chapter 8.6 (commencing with Section 1760).
(c) “Long-term health care facility” does not include a general acute care hospital or an acute psychiatric hospital, except for that distinct part of the hospital that provides skilled nursing facility, intermediate care facility, intermediate care facility/developmentally disabled, or pediatric day health and respite care facility services.
(d) “Licensee” means the holder of a license issued under Chapter 2 (commencing with Section 1250) or Chapter 8.6 (commencing with Section 1760) for a long-term health care facility.
(e) “Related party” has the same meaning as in Section 128734.1. 128734.

SEC. 2.

 Section 128734 of the Health and Safety Code is amended to read:

128734.
 (a) Each organization that operates, conducts, owns, or maintains a skilled nursing facility licensed pursuant to subdivision (c) of Section 1250 shall file with the office as part of the information required in subdivisions (a) to (e), inclusive, of Section 128735, whether the licensee, or a general partner, director, or officer of the licensee, has an ownership or control interest of 5 percent or more in a related party that provides any service to the skilled nursing facility. If the licensee, or the general partner, director, or officer of the licensee has such an interest, the licensee shall disclose all services provided to the skilled nursing facility, the number of individuals who provide that service at the skilled nursing facility, and any other information requested by the office. If goods, fees, and services collectively worth ten thousand dollars ($10,000) or more per year are delivered to the skilled nursing facility, the disclosure required pursuant to this subdivision shall include the related party’s profit and loss statement, and the Payroll-Based Journal public use data of the previous quarter for the skilled nursing facility’s direct caregivers.
(b) For purposes of this section, all of the following definitions shall apply:
(1) “Common ownership” means an individual or individuals who possess any ownership or equity in the provider and the institution or organization serving the provider.
(2) “Control” means an individual or organization that has the power, directly or indirectly, to influence or direct the licensee’s actions or policies, or care provided to residents of the licensee’s facility.

(1)

(3) “Direct caregiver” shall have the same meaning as that term is defined in Section 1276.65.

(2)

(4) “Profit and loss statement” means the most recent annual statement on profits and losses finalized by a related party for the most recent year available.
(5) “Related to the licensee provider” means that the provider is closely associated or affiliated with, or has control of or is controlled by, the organization furnishing the services, facilities, or supplies.

(3)

(6) “Related party” means an organization related to the licensee provider or that is under common ownership or control, as defined in Section 413.17(b) of Title 42 of the Code of Federal Regulations. and may include, but is not 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; any and all parent companies, holding companies, and sister organizations; and an immediate family member of an owner of those organizations, including spouse, natural parent, child, sibling, 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, grandchild, and any person, other than a tenant or employee, sharing the household, unless the parties can demonstrate that they are acting separately and in their own independent interests.
(c) Current licensees shall provide the information required by this section to the office in a manner prescribed by the office.
(d) The provisions of this section shall become effective on January 1, 2020.

SEC. 2.SEC. 3.

 Section 128734.1 is added to the Health and Safety Code, to read:

128734.1.
 (a) (1) An organization that operates, conducts, owns, manages, or maintains a skilled nursing facility or facilities licensed pursuant to subdivision (c) of Section 1250 shall prepare and file with the office, at the times as the office shall require, an annual consolidated financial report. The financial report shall include data from all operating entities, license holders, and related parties in which the organization has an ownership or control interest of 5 percent or more and that provides any service, facility, or supply to the skilled nursing facility.
(2) The annual consolidated financial report required by paragraph (1) shall be prepared and reviewed by a certified public accounting firm within six months of the end of each fiscal year, 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 shall include, but not be limited to, the following statements:
(A) A balance sheet detailing the assets, liabilities, and net worth of the skilled nursing facility at the end of its 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, Medi-Cal, and other payers, and revenue center.
(D) A statement of cashflows, including, but not limited to, ongoing and new capital expenditures and depreciation.
(E) A statement reporting the information required in subparagraphs (A), (B), (C), and (D) for each separately licensed health facility operated, conducted, or maintained by the reporting organization and for each health facility operated, conducted, owned, managed, or maintained by a parent organization of the reporting organization.
(3) The annual consolidated financial report required by paragraph (1) shall include a detailed flowchart outlining the organization’s structure that includes both of the following:
(A) All related parties in which the organization has an ownership or control interest of 5 percent or more and which that provides any service, facility, or supply to the skilled nursing facility.
(B) Unrelated parties that provide services, facilities, or supplies to the skilled nursing facility or facilities that are operated, conducted, owned, managed, or maintained by the organization, including, but not limited to, management companies and property companies.

(b)Management companies and property companies that are not related by ownership or control to an organization described in paragraph (1) of subdivision (a), but that contract with, or have entered into leases with, one of those organizations, shall prepare and file an annual consolidated financial report, prepared and submitted in accordance with the requirements established in subdivision (a). The financial report shall include copies of the management companies’ or property companies’ contractual agreements and leases, as applicable, with an organization described in paragraph (1) of subdivision (a) and any information required to be disclosed by a related party pursuant to Section 128734, including a profit and loss statement.

(b) An organization that operates, conducts, owns, manages, or maintains a skilled nursing facility or facilities licensed pursuant to subdivision (c) of Section 1250 shall submit copies of all contractual agreements and leases with any organization for which a skilled nursing facility is required to include data in its financial report pursuant to paragraph (1) of subdivision (a) and any provider of goods and services that is paid 1 percent of gross revenue or more.
(c) The office shall post reports and related documents submitted pursuant to this section to its internet website.
(d) Any report, document, statement, writing or any other type of record received, owned, used, or retained by the office in connection with this section is a public record within the meaning of subdivision (d) of Section 6252 of the Government Code and is subject to disclosure pursuant to the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code).
(e) For the purposes of this section, the following terms have the following meanings:
(1) “Management company” means a company or entity that exercises “Manage” means exercising operational control of a skilled nursing facility or that has assumed or been delegated assuming any role, either through contract or another arrangement, with decisionmaking authority that impacts the delivery of care, services, staffing, personnel, administrative management, or any other operational role a skilled nursing facility is required to undertake under state and federal law. A company or entity shall not be deemed to manage a skilled nursing facility unless the company or entity is receiving more than 1 percent of gross revenue from a skilled nursing facility.
(2) “Related party” has the same meaning as in Section 128734. “Related party” may include, but is not 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; any and all parent companies, holding companies, and sister organizations; and an immediate family member of an owner of those organizations; including spouse, natural parent, child, sibling, adopted child, adoptive parent, step-parent, step-child, step-sister, step-brother, father-in-law, mother-in-law, sister-in-law, brother-in-law, son-in-law, daughter-in-law, grandparent, grandchild, and any person, other than a tenant or employee, sharing the household, unless the parties can demonstrate that they are acting separately and in their own independent interests.