Illinois Bill Pushes Long-Term Care Operators to Reveal Ownership Interests

Illinois legislators are taking action to increase scrutiny of nursing home ownership. The disclosure provisions are included in the Compromise Nursing Home Rate Reform Bills (HB 4678)¹.  The Bill also includes additional compliance measures and attempts to tie funding/rates/incentives to demonstrable and sustained nursing home performance utilizing an evidence-based methodology that rewards staffing and quality-of-life improvements for nursing facility residents.

The Bill, if passed, would require greater transparency of nursing home ownership. The Illinois statute currently provides that a provider who begins operating or maintaining a long-term care facility that was under a prior ownership must notify the Illinois Department of Public Health of the change in ownership.² The Bill revises the statute to require notification of “any change in ownership regardless of percentage.” Currently, as a condition for license issuance or renewal, the applicant must file a statement of ownership containing the percent of direct or indirect financial interest of those persons who have a direct or indirect financial interest of 5% or more in the legal entity designated as the operator/licensee of the facility.³ The proposed change to the law requiring notice regardless of percentage broadens reporting requirements for Illinois long-term care facilities.

Additionally, the bill includes a requirement that within 90 days after the amendment’s effective date “all providers operating or maintaining a long-term care facility shall notify the Illinois Department of all individual owners and any individuals or organizations that are part of a limited liability company with ownership of that facility and the percentage ownership of each owner.” This ownership reporting requirement does not include individual shareholders in a publicly held corporation.

This Bill represents a trend throughout the country of increased transparency of nursing home ownership. For more information, please contact Change of Ownership (CHOW) team attorneys Hedy Rubinger or Kadeja Watts.⁴

[1] HB 4678 can be viewed at https://www.ilga.gov/legislation/BillStatus.asp?DocNum=4678&GAID=16&DocTypeID=HB&LegId=138849&SessionID=110&GA=102 (last accessed Feb. 24, 2022).

[2] 305 Ill. Comp. Stat. Ann. 5/5B-5.

[3] 77 Ill. Adm. Code 300.250.

[4] The Arnall Golden Gregory Change of Ownership (CHOW) team leads all regulatory aspects of healthcare transactions for investors, operators, managers, capital partners, and developers of every size in all 50 states. The team streamlines the regulatory process so that clients close their transactions on or ahead of schedule. Whether obtaining licensure and Medicare/Medicaid approvals, structuring transactions to expedite closings, anticipating issues to minimize cash flow disruption, negotiating regulatory terms in deal documents, creatively resolving diligence issues, or advising on CHOW guidelines and compliance, the team provides extensive experience and practical solutions. To date, the CHOW team has served as primary regulatory counsel in transactions valued at more than $25 billion.