Every Medicaid provider agreement rests on an accurate accounting of who owns and controls the business behind it. 42 CFR 455 Subpart B requires Medicaid providers, fiscal agents, and managed care entities to disclose the individuals and entities that own or control them, not only at enrollment but again at revalidation and within a fixed window after any change. Skilled nursing facilities and nursing facilities now face a wider net still, reaching private equity companies and real estate investment trusts (REITs) that stand behind a facility's ownership structure. A provider that omits a disclosable owner, whether by oversight or design, risks a denied or terminated provider agreement and, where the omission was certified knowingly, exposure under the False Claims Act.
Who Counts As a Disclosable Owner
42 CFR 455.101 defines a person with an ownership or control interest as anyone holding 5 percent or more direct or indirect ownership in the provider, or a 5 percent or more secured interest in the provider's assets, along with any officer, director, or partner regardless of percentage. The same section defines a managing employee as a general manager, business manager, administrator, or director who exercises operational or managerial control over the provider's day-to-day activities, whether as an employee or under contract. A disclosing entity, meaning a Medicaid provider other than an individual practitioner or practice group, or a Medicaid fiscal agent, must report both categories by name and address, plus any family relationships or other entities a disclosed owner also holds.
When Disclosure Is Due
42 CFR 455.104 sets four triggers: submission of the initial provider application, execution or renewal of the provider agreement, a request from the state Medicaid agency during revalidation of enrollment, and within 35 days of any change in the disclosing entity's ownership. Fiscal agents and managed care entities face the same 35-day window for a change in their own ownership. A state agency investigating a disclosure discrepancy may also move to a payment suspension under 42 CFR 455.23 while it verifies the ownership record.
Nursing Facilities Face an Added Disclosure Layer
Effective January 16, 2024, a CMS final rule implementing Section 6101 of the Affordable Care Act (88 Fed. Reg. 80,141, Nov. 17, 2023) added the additional disclosable party (ADP) category to skilled nursing and Medicaid nursing facility disclosures. An ADP is any person or entity that exercises operational, financial, or managerial control over the facility, sets policy for its operations, provides financial or cash management services, or leases real property to it. Every owning and managing entity of a nursing facility must now state whether it is a private equity company or a real estate investment trust. The rule does not yet reach every Medicaid provider type, but it signals where CMS's disclosure rulemaking is heading.
A disclosing entity that fails to report an owner, a managing employee, or an additional disclosable party risks more than a rejected application. Federal financial participation is not available for payments made to a provider that has not met its disclosure obligation under 42 CFR 455.104.
The Cost of an Inaccurate or Omitted Disclosure
42 CFR 455.106 lets the state Medicaid agency refuse to enter into or renew a provider agreement when a disclosed owner, agent, or managing employee has been convicted of a Medicare, Medicaid, or Title XX program-related offense, and must notify the HHS Office of Inspector General within 20 working days. The same section lets the agency terminate an existing agreement where the provider did not fully and accurately disclose what the regulation requires, apart from the conviction itself. Because most enrollment applications require an authorized official to certify the disclosure's accuracy under penalty of law, a knowingly false filing can also support False Claims Act liability, and a disclosed owner who turns out to be excluded can draw an OIG exclusion inquiry that reaches the provider's own billing privileges.
Why Early Legal Counsel Is Critical
It is critical that Medicaid providers retain experienced healthcare defense counsel before completing an enrollment or revalidation disclosure, and immediately upon receiving a state Medicaid agency inquiry into ownership or control. Early legal intervention can protect the provider's rights, ensure the disclosure accurately reflects every 5 percent owner and managing employee, avoid inadvertent misstatements on a certified form, and preserve the provider's defenses if the state later questions the filing. Delaying legal review can significantly affect the outcome and expose the provider to unnecessary risk.
How Health Law Alliance Can Help
Health Law Alliance has represented 2,500+ clients over 25+ years, including providers navigating Medicaid ownership and control disclosure at enrollment, revalidation, and after a change in ownership. Our Medicaid audit defense attorneys review disclosure filings before submission, respond to state agency inquiries into undisclosed owners or managing employees, and defend providers facing denial or termination over an incomplete disclosure. Contact Health Law Alliance for a free, confidential consultation.
