California SNFs: Proposed State Reporting for 2023

See updated details in the alert, New Reporting Requirements for California SNFs Designed to Boost Transparency, published March 12, 2024.

California Senate Bill 650 (SB 650), approved in 2021, requires certain incremental financial reporting by skilled nursing facilities (SNFs) to increase financial and operational transparency.

In July 2023, the Department of Health Care Access and Information (HCAI) published proposed regulatory text, with comments due by September 5, 2023, to implement SB 650. Required reporting begins with fiscal years ending December 31, 2023, and will be due within four months after the fiscal year end.

In addition to providing increased transparency, the implementation of SB 650 is likely to impact the California SNF’s operations, annual financial reporting, and auditing procedures.

Key Impacts

The proposed HCAI regulations would require an organization that operates or manages a SNF to prepare and file an annual consolidated financial report audited or reviewed by a certified public accountant.

The report must include:

  • Balance sheet
  • Statement of changes in equity
  • Statement of income, expense, and operating surplus or deficit
  • Statement of cash flows
  • Combined financial statement that includes all entities included in the consolidated financial report
  • Statement of patient census by payer
  • Statement of patient revenue by payer and by routine and ancillary revenue

The above schedules will also be required for each operating entity, license holder, and related party in which the organization has a 5% or more ownership interest and that provides any service, facility, or supply to the SNF.

Additionally, a visual representation of the organization’s structure will need to be included in the annual consolidated financial report and include:

  • Related parties that the organization has a 5% or greater interest in and provide service, facility, or supply to the SNF
  • Unrelated parties that provide service, facility, or supply to the SNF or facilities that are owned or managed by the organization and paid more than $200,000 by the SNF

The reporting due date is four months after the SNF’s fiscal year-end. SNFs that fail to meet the required reporting due date will be liable for a civil penalty of $100 per day, up to a maximum of $36,500.

We’re Here to Help

For help understanding the impact of the California proposed regulations to your health care organization, contact your Moss Adams professional.

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