Relating to the regulation of certain nursing facilities, including licensing requirements and Medicaid participation and reimbursement requirements.

Contracts

• Purchase & Sale Agreements (PSAs): Buyers must now assume statutory liability for the seller's Medicaid debts to maintain cash flow. You must strengthen indemnification clauses to hold sellers contractually liable for pre-closing overpayments or penalties discovered post-closing.
• Lease Agreements: Landlords and REITs are now subject to ownership disclosure. Amend leases to require property owners to provide ownership charts (identifying all >5% stakeholders) within 5 business days of a request to satisfy HHSC licensing deadlines.
• Managed Care (MCO) Agreements: MCOs are statutorily required to incorporate the 80/20 compliance rules into provider contracts. Expect amendments to STAR+PLUS agreements in mid-2025.

Hiring/Training

• Finance/Accounting: Staff must be trained on Section 32.0286 definitions to correctly segregate "patient care" expenses (e.g., nursing staff, food, medical supplies) from administrative/capital costs.
• Due Diligence Teams: Acquisitions teams must expand due diligence to identify hidden Medicaid liabilities, as "Tail Coverage" insurance will become critical.

Reporting & Record-Keeping

• Expanded Ownership Disclosure: License applications now require disclosure of any person/entity with >5% interest in the Real Property (land/building), not just the operations.
• Expense Ratio Accounting: You must establish a separate accounting track to verify the 80% spend annually. This data will be subject to HHSC audit.

Fees & Costs

• Recoupment Risk: Failure to meet the 80/20 ratio results in direct clawback of Medicaid funds.
• Insurance Premiums: Expect increased costs for Reps & Warranties insurance and Tail Coverage due to the new successor liability mandates.