2024 -- S 2604

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LC005141

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2024

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A N   A C T

RELATING TO HEALTH AND SAFETY -- LICENSING OF HEALTH CARE FACILITIES

     Introduced By: Senators Euer, Valverde, Lauria, Murray, Lawson, McKenney,
Sosnowski, DiMario, Cano, and Gallo

     Date Introduced: March 01, 2024

     Referred To: Senate Health & Human Services

     It is enacted by the General Assembly as follows:

     SECTION 1. Sections 23-17-2, 23-17-5.1 and 23-17-65 of the General Laws in Chapter

23-17 entitled "Licensing of Healthcare Facilities" are hereby amended to read as follows:

     23-17-2. Definitions.

     As used in this chapter:

     (1) “Affiliate” means a legal entity that is in control of, is controlled by, or is in common

control with another legal entity.

     (2) “Alzheimer’s dementia special-care unit or program” means a distinct living

environment within a nursing facility that has been physically adapted to accommodate the

particular needs and behaviors of those with dementia. The unit provides increased staffing;

therapeutic activities designed specifically for those with dementia; and trains its staff on an

ongoing basis on the effective management of the physical and behavioral problems of those with

dementia. The residents of the unit/program have had a standard, medical-diagnostic evaluation

and have been determined to have a diagnosis of Alzheimer’s dementia or another dementia.

     (3) “Certified nurse-teacher” means those personnel certified by the department of

elementary and secondary education and employed pursuant to the provisions of §§ 16-21-7 and

16-21-8.

     (4)(i) “Change in operator” means a transfer by the governing body or operator of a

healthcare facility to any other person (excluding delegations of authority to the medical or

administrative staff of the facility) of the governing body’s authority to:

     (A) Hire or fire the chief executive officer of the healthcare facility;

     (B) Maintain and control the books and records of the healthcare facility;

     (C) Dispose of assets and incur liabilities on behalf of the healthcare facility; or

     (D) Adopt and enforce policies regarding operation of the healthcare facility.

     (ii) This definition is not applicable to circumstances wherein the governing body of a

healthcare facility retains the immediate authority and jurisdiction over the activities enumerated

in subsections (4)(i)(A) — (4)(i)(D).

     (5) “Change in owner” means:

     (i) In the case of a healthcare facility that is a partnership, the removal, addition, or

substitution of a partner that results in a new partner acquiring a controlling interest in the

partnership;

     (ii) In the case of a healthcare facility that is an unincorporated, solo proprietorship, the

transfer of the title and property to another person;

     (iii) In the case of a healthcare facility that is a corporation:

     (A) A sale, lease exchange, or other disposition of all, or substantially all, of the property

and assets of the corporation; or

     (B) A merger of the corporation into another corporation; or

     (C) The consolidation or two (2) or more corporations, resulting in the creation of a new

corporation; or

     (D) In the case of a healthcare facility that is a business corporation, any transfer of

corporate stock that results in a new person acquiring a controlling interest in the corporation; or

     (E) In the case of a healthcare facility that is a nonbusiness corporation, any change in

membership that results in a new person acquiring a controlling vote in the corporation.

     (6) “Clinician” means a physician licensed under chapter 37 of title 5; a nurse licensed

under chapter 34 of title 5; a psychologist licensed under chapter 44 of title 5; a social worker

licensed under chapter 39.1 of title 5; a physical therapist licensed under chapter 40 of title 5; and

a speech language pathologist or audiologist licensed under chapter 48 of title 5.

     (7) “Director” means the director of the Rhode Island state department of health.

     (8) “Freestanding emergency-care facility” means an establishment, place, or facility that

may be a public or private organization, structurally distinct and separate from a hospital; staffed,

equipped, and operated to provide prompt, emergency medical care. For the purposes of this

chapter, “emergency medical care” means services provided for a medical condition or behavioral-

health condition that is manifested by symptoms of sufficient severity that, in the absence of

immediate medical attention, could result in harm to the person or others; serious impairment to

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bodily functions; serious dysfunction of any bodily organ or part; or development or continuance

of severe pain.

     (9) “Healthcare facility” means any institutional health-service provider, facility, or

institution, place, building, agency, or portion thereof, whether a partnership or corporation,

whether public or private, whether organized for profit or not, used, operated, or engaged in

providing healthcare services, including, but not limited to: hospitals; nursing facilities; home

nursing-care provider (which shall include skilled nursing services and may also include activities

allowed as a home-care provider or as a nursing service agency); home-care provider (which may

include services such as personal care or homemaker services); rehabilitation centers; kidney

disease treatment centers; health maintenance organizations; freestanding emergency-care facilities

as defined in this section, and facilities providing surgical treatment to patients not requiring

hospitalization (surgi-centers); hospice care, and physician ambulatory-surgery centers and

podiatry ambulatory-surgery centers providing surgical treatment. The term “healthcare facility”

also includes organized ambulatory-care facilities that are not part of a hospital but that are

organized and operated to provide healthcare services to outpatients, such as: central-services

facilities serving more than one healthcare facility or healthcare provider; treatment centers;

diagnostic centers; outpatient clinics; infirmaries and health centers; school-based health centers,

and neighborhood health centers. The term “healthcare facility” also includes a mobile health-

screening vehicle as defined in this section. The term “healthcare facility” shall not apply to

organized, ambulatory-care facilities owned and operated by professional service corporations as

defined in chapter 5.1 of title 7, as amended (the “professional service corporation law”), or to a

practitioner’s (physician, dentist, or other healthcare provider) office or group of practitioners’

offices (whether owned and/or operated by a hospital or an affiliate of a hospital or an individual

practitioner, alone or as a member of a partnership, professional service corporation, organization,

or association); provided, however, notwithstanding any other provision herein or in the general

laws, any hospital or any affiliate of a hospital that owns and/or operates a practitioner’s office shall

ensure that such practitioner’s office complies with licensing or accreditation requirements that

may be applicable to the practitioner’s office. Individual categories of healthcare facilities shall be

defined in rules and regulations promulgated by the licensing agency with the advice of the health

services council. Rules and regulations concerning hospice care shall be promulgated with regard

to the “Standards of a Hospice Program of Care,” promulgated by the National Hospice

Organization. Any provider of hospice care who provides hospice care without charge shall be

exempt from the licensing provisions of this chapter but shall meet the “Standards of a Hospice

Program of Care.” Facilities licensed by the department of behavioral healthcare, developmental

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disabilities and hospitals and the department of human services, and clinical laboratories licensed

in accordance with chapter 16.2 of this title, as well as Christian Science institutions (also known

as Christian Science Nursing Facilities) listed and certified by the Commission for Accreditation

of Christian Science Nursing Organizations/Facilities, Inc. shall not be considered healthcare

facilities for purposes of this chapter.

     (10) “Homemaker,” or however else called, means a trained, nonprofessional worker who

performs related housekeeping services in the home for the sick, disabled, dependent, or infirm,

and as further defined by regulation; the director shall establish criteria for training.

     (11) “Hospital” means a person or governmental entity licensed in accordance with this

chapter to establish, maintain, and operate a hospital.

     (12) “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.

     (12)(13) “Licensing agency” means the Rhode Island state department of health.

     (13)(14) “Medical services” means any professional services and supplies rendered by, or

under the direction of, persons duly licensed under the laws of this state to practice medicine,

surgery, or podiatry that may be specified by any medical service plan. Medical service shall not

be construed to include hospital services.

     (14)(15) “Mobile health-screening vehicle” means a mobile vehicle, van, or trailer that

delivers primary and preventive healthcare screening services, and:

     (i) Does not maintain active contracts or arrangements with any health insurer subject to

regulation under chapter 20 or 42 of title 27;

     (ii) Does not maintain active contracts or arrangements with another licensed healthcare

facility as that term is defined within this section; and

     (iii) Does not provide medical services free of charge.

     (15)(16) “Non-English speaker” means a person who cannot speak or understand, or has

difficulty in speaking or understanding, the English language, because he/she uses only, or

primarily, a spoken language other than English, and/or a person who uses a sign language and

requires the use of a sign-language interpreter to facilitate communication.

     (16)(17) “Person” means any individual, trust or estate, partnership, corporation (including

associations, joint stock companies, and insurance companies), state, or political subdivision or

instrumentality of a state.

     (17)(18) “Physician ambulatory-surgery center” means an office, or portion of an office,

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that is utilized for the purpose of furnishing surgical services to the owner and/or operator’s own

patients on an ambulatory basis, and shall include both single-practice, physician ambulatory-

surgery centers and multi-practice, physician ambulatory-surgery centers. A “single-practice,

physician ambulatory-surgery center” is a physician ambulatory center owned and/or operated by

a physician-controlled professional service corporation as defined in chapter 5.1 of title 7 (the

“professional service corporation law”), or a physician-controlled limited-liability company (as

defined in chapter 16 of title 7 (the “limited liability company act”)) in which no physician is an

officer, shareholder, director, or employee of any other corporation engaged in the practice of the

same profession, or a private physician’s office (whether owned and/or operated by an individual

practitioner, alone or as a member of a partnership, professional service corporation, limited-

liability company, organization, or association). A “multi-practice, physician ambulatory-surgery

center” is a physician ambulatory-surgery center owned and/or operated by a physician-controlled

professional service corporation (as defined in the professional service corporation law) or a

physician-controlled limited-liability company (as defined in the limited liability company act) in

which a physician is also an officer, shareholder, director, or employee of another corporation

engaged in the practice of the same profession, or a group of physicians’ offices (whether owned

and/or operated by an individual practitioner, alone or as a member of a partnership, professional

service corporation, limited-liability company, organization, or association).

     (18)(19) “Podiatry ambulatory-surgery center” means an office or portion of an office that

is utilized for the purpose of furnishing surgical services to the owner and/or operator’s own

patients on an ambulatory basis, and shall include both single-practice, podiatry ambulatory-

surgery centers and multi-practice podiatry ambulatory-surgery centers. A “single-practice podiatry

ambulatory-surgery center” is a podiatry ambulatory center owned and/or operated by a podiatrist-

controlled professional service corporation (as defined in chapter 5.1 of title 7 (the “professional

service corporation law”)), or a podiatrist-controlled limited-liability company (as defined in

chapter 16 of title 7 (the “limited liability company act”)) in which no podiatrist is an officer,

shareholder, director, or employee of any other corporation engaged in the practice of the same

profession, or a private podiatrist’s office (whether owned and/or operated by an individual

practitioner, alone or as a member of a partnership, professional service corporation, limited-

liability company, organization, or association). A “multi-practice, podiatry ambulatory-surgery

center” is a podiatry ambulatory-surgery center owned and/or operated by a podiatrist-controlled

professional service corporation (as defined in the professional service corporation law) or a

podiatrist-controlled, limited-liability company (as defined in the limited liability company act) in

which a podiatrist is also an officer, shareholder, director, or employee of another corporation

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engaged in the practice of the same profession, or a group of podiatrists’ offices (whether owned

and/or operated by an individual practitioner, alone or as a member of a partnership, professional

service corporation, limited-liability company, organization, or association).

     (19)(20) “Qualified interpreter” means a person who, through experience and/or training,

is able to translate a particular foreign language into English, with the exception of sign-language

interpreters who must be licensed in accordance with chapter 71 of title 5.

     (20)(21) “Qualified sign-language interpreter” means one who has been licensed in

accordance with the provisions of chapter 71 of title 5.

     (22) “Related party” means an organization related to an owner of a nursing home or related

to a third-party entity to which substantial management control of the nursing home's operations is

to be delegated, 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 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 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 (5%) 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 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; and any

entity in which an immediate family member of an owner of those organizations has an ownership

interest of five (5%) percent or more.

     (21)(23) “School-based health center” means a facility located in an elementary or

secondary school licensed as a school-based health center that delivers primary and/or preventive

healthcare services to individuals to include, but not be limited to, students on site.

     (24) “Substantial management control” means the primary authority to direct the operation

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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.

     23-17-5.1. Additional information required of nursing facility applicants for initial

licensure or change of ownership.

     (a) The department shall adopt regulations regarding information to be provided by

applicants for the initial licensure of or change of ownership of a nursing facility to include

information relating to the background and qualifications of the applicant or proposed license

holder. For purposes of this section, applicants must meet a financial threshold that shall include,

as a minimum, that the applicant or proposed license holder shall have sufficient resources to

operate the nursing facility at licensed capacity for thirty (30) days, evidenced by an unencumbered

line of credit, a joint escrow account established with the department, or a performance bond

secured in favor of the state or a similar form of security satisfactory to the department. The

department may also require background information to be submitted relating to any partner,

officer, director, manager or member (if member-managed) of the applicant or proposed license

holder, or information relating to each person having a beneficial ownership interest of five percent

(5%) or more in the applicant or proposed license holder.

     (b) In reviewing information required by subsection (a), the department may require the

applicant or proposed license holder to file a sworn affidavit substantiating the validity of any

submitted information as required by the department to substantiate a satisfactory compliance

history relating to each state or other jurisdiction in which the applicant, proposed license holder

or any other person described by subsection (a) operated a nursing facility at any time during the

five-year period preceding the date on which the application is made. The department shall

determine what constitutes a satisfactory compliance history. The department may also require the

applicant or proposed license holder to file information relating to the current financial condition

of the applicant, proposed license holder or any other person described by subsection (a) and the

history of the financial condition of the applicant, proposed license holder or any other person

described by subsection (a) with respect to a facility operated in another state or jurisdiction at any

time during the five-year period preceding the date on which the application is made.

     (c) In addition to the information required to be provided in subsections (a) and (b) above,

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the department shall gather information from state departments and agencies relating to the

background and qualifications of the applicant, proposed license holder, or any person having a

five percent (5%) or more beneficial ownership interest.

     (d) Any applicant seeking a nursing facility license who intends to contract with a

management company to assist with that facility’s operations shall file a copy of the proposed

management contract with the department or provide information to the department regarding the

management services to be provided by the management company that indicate the management

fees to be paid and areas of control for which the management company shall be responsible. All

applications for initial licensure and change of ownership shall include copies of any proposed

management contracts and information about management fee arrangements as well as

identification of every person having an ownership of five percent (5%) or more in the management

company, if the management company is a corporation or limited liability company, and

identification of every general or limited partner if the management company is a general

partnership or a limited partnership.

     (e) The department shall require the filing of the following documents any time there is a

change in ownership of five (5%) percent or more in the management company:

     (1) Organizational chart, which shall include, as applicable, parent corporations and

entities, wholly owned subsidiaries, and related parties and the names and addresses of all owners,

principals, and interested parties of the third-party entity;

     (2) All agreements, both draft and final, for the lease of property;

     (3) All management agreements, both draft and final;

     (4) A history of all disciplinary actions at all other facilities owned, operated, or managed

by the proposed owners and principals in Rhode Island and in any other jurisdiction;

     (5) Documentation of all outstanding and issued Medicaid audit claims, Medicaid

overpayments and state-issued penalties by the department of health pertaining to the operations of

the proposed owners;

     (6) A consolidated financial statement for the third-party entity that meets the requirements

of the department which shall include consolidated owner-certified financial statements for all

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 (3) years.

     (i) Consolidated financial statements may include, but are not limited to:

     (A) A balance sheet detailing the assets, liabilities, and net worth at the end of the reporting

entity’s fiscal year;

     (B) A statement of income, expenses, and operating surplus or deficit for the annual fiscal

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period, and a statement of ancillary utilization and patient census;

     (C) A statement detailing patient revenue by payer, including, but not limited to, Medicare,

and other payers, and revenue center;

     (D) A statement of cash flows, including, but not limited to, ongoing and new capital

expenditures and depreciation; and

     (E) A statement of any loans or equipment leases in excess of ten thousand dollars

($10,000) dollars and the interest rate and any fees charged by the lender or lessor; and

     (7) In the case of an application to transfer an interest of less than five percent (5%) in a

nursing home, the applicant shall:

     (i) Disclose any licensed health care facilities owned, operated, or managed by the

proposed owners and principals in any state or territory of the United States or in the District of

Columbia in the preceding year;

     (ii) If the applicant has never previously owned or operated a licensed health care facility

in Rhode Island, the applicant shall submit to a criminal history record background check of each

proposed owner and principal, including related parties; and

     (iii) A combined financial statement that includes all entities reported in the consolidated

financial statement, unless the reporting entity is prohibited from including a combined financial

statement in a consolidated 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.

     (f) Nothing in this section shall be construed to authorize any nursing home to delegate

substantial management control of the nursing home's operations to a third-party entity without

providing prior written notice to the department.

     23-17-65. Transparency of ownership in healthcare facilities. Transparency of

ownership in healthcare facilities and related parties.

     (a) Any operator or operators of a nursing facility shall file with the department of health

information of one hundred percent (100%) of the current ownership including, but not limited to,

the following:

     (1) The name, address, and a description of the interest held by each of the following

persons or parties:

     (i) Any person who, directly or indirectly, beneficially owns any interest in the land on

which the facility is located;

     (ii) Any person who, directly or indirectly, beneficially owns any interest in the building

in which the facility is located;

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     (iii) Any person who, directly or indirectly, beneficially owns any 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 facility is located;

     (iv) Any person who, directly or indirectly, has any interest as lessor or lessee in any lease

or sub-lease of the land on which or the building in which the facility is located, including a copy

of any lease agreements for real property;

      (v) Any person who is the ultimate and actual owner of the land, building, mortgages, and

leases of the nursing facility and any lessee of the land or building; and

     (vi) The operator or operators of the nursing facility. Parent entities, wholly-owned

subsidiaries, and related parties which any owner or principal has an ownership or controlling

interest of five (5%) percent or more that will or are expected to provide a service, facility, or

supplies to the nursing home; and

     (vii) Unrelated parties that will or are expected to provide a service, facility, or supplies to

the nursing home and that will or are expected to be paid more than two hundred thousand dollars

($200,000) by the nursing home in the coming year.

     (2) If any person named in subsection (a)(1) of this section is a partnership or limited

liability company, then the name and address of each partner or member.

     (3) If any person named in subsection (a)(1) of this section is a corporation, other than a

corporation whose shares are traded on a national securities exchange or are regularly quoted in an

over-the-counter market or which is a commercial bank, savings bank, or savings and loan

association, then the name and address of each officer, director, stockholder and, if known, each

principal stockholder and controlling person of such corporation.

     (4) If any corporation named in subsection (a)(1) of this section is a corporation whose

shares are traded on a national securities exchange or are regularly quoted in an over-the-counter

market 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 and, if known, each principal

stockholder of such corporation.

     (b) In order to promote greater transparency, the department of health shall, upon request,

furnish to the public all documents and information received pursuant to this section.

     (c) As used in this section, the term “operator” means the licensee and also includes the

complete ownership entity above the actual entity holding the license.

     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO HEALTH AND SAFETY -- LICENSING OF HEALTH CARE FACILITIES

***

     This act would include immediate family members and related parties to be included in the

definitions applicable to the chapter and require that information for nursing facility applicants for

initial licensure or change of ownership. Provide financial documentation and detailed information

relating to ownership of the applicant.

     This act would take effect upon passage.

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