5 Trends to Watch: 2025 Post-Acute Care

1. New Skilled Nursing Facility Disclosures. 2024 has seen heightened federal and state scrutiny regarding the ownership and governance models of Skilled Nursing Facilities (SNFs). The Centers of Medicare & Medicaid Services (CMS) released the new CMS 855A form in September 2024, which supports the regulations on SNFs (the Final Rule) published in November 2023.
   
   Under the Final Rule and the revised CMS 855A, SNFs are now required to report the information previously required in Sections 5 and 6 of CMS 855A and a new set of disclosures of ownership, control, and Additional Disclosable Parties (ADPs). According to a sub-regulatory Guidance for SNF Attachment on Form CMS-855A, released Nov. 26, 2024, ADPs include parties that exercise "operational, financial, or managerial control over the SNF," parties that lease or sublease real property to the SNF, parties that provide management or administrative services to the SNF, and parties who oversee any aspect of a SNF's daily operations.
   
   SNFs must comply with new reporting requirements by May 1, 2025. We anticipate a greater level of compliance scrutiny on SNFs in the first half of 2025 and beyond, and greater interest and intensified scrutiny into SNF ownership by state and federal regulators in the coming year.
   
   
2. Heightened Compliance Obligations for SNFs. In 2024, SNFs were also the subject of federal scrutiny regarding fraud and abuse compliance. On Nov. 20, 2024, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) published the "Nursing Facility Industry Segment - Specific Program Guidance" (ICPG) to assist SNFs in mitigating what OIG called "widespread, chronic challenges that providers face in maintaining compliance and quality programs that are effective in ensuring safe, high-quality care for residents."
   
   The last time OIG published compliance program guidance for nursing facilities was in 2008. Since then, the nursing facility industry has faced significant and high-profile changes, including the advent of new technologies, the Public Health Emergency, and changes in federal and state reimbursement. The ICPG identifies vulnerabilities in existing SNF compliance programs, including resident quality of life, CMS billing requirements, and compliance with federal fraud and abuse laws.
   
   We anticipate heightened enforcement of compliance requirements identified in the ICPG. Although some providers may require only minor adjustments to existing policies and procedures, we anticipate a greater requirement for updated compliance programs in SNFs to avoid federal scrutiny, investigation, and enforcement on the compliance vulnerabilities highlighted in the ICPG.
   
   
3. Increased Regulation of Ownership of Not-For-Profit Post-Acute Facilities. 2024 has also seen a growing number of states introducing or passing legislation on assisted living facilities (ALFs). These laws include ownership disclosure requirements and transitioning from a certification model to a licensure model with requirements that align with traditional health care provider licensure.
   
   These new laws align with the trend of federal regulators expressing heightened suspicion for and scrutiny into private ownership of both for-profit and not-for-profit post-acute facilities. From a heightened focus by the Internal Revenue Service on privately-owned nonprofit health care facility compliance with the "community benefit" standard to the introduction of the Health Over Wealth Act and the release of the new CMS 855A discussed above, we have seen an increase in federal scrutiny on post-acute care facilities owned, operated, or managed by private actors.
   
   We anticipate seeing further scrutiny into post-acute care ownership paired with further state and federal disclosure requirements for ownership and control (including governance models). On the state level, we also anticipate seeing new and revised licensure requirements for ALFs and other non-SNF post-acute care facilities.
   
   
4. Staffing Challenges and Growing Occupancy of Post-Acute Facilities. According to the most recent quarterly occupancy report from the National Investment Center for Seniors Housing & Care (NIC), the occupancy rates of senior housing, assisted living, and independent living continue to grow, and these rates are projected to meet or exceed pre-pandemic rates in 2025.
   
   However, the increased demand for post-acute services has begun to outpace the supply of available services, due to both a lack of facilities and the ongoing staffing challenges faced by post-acute care providers. The Health Resources and Services Administration predicted the United States will continue to face shortages in nursing staff for the next 15 years. Staffing challenges have been exacerbated by federal regulation, such as the "Medicare and Medicaid Programs; Minimum Staffing Standards for Long-Term Care Facilities and Medicaid Institutional Payment Transparency Reporting" (LTC Rule). The LTC Rule established minimum staffing requirements for post-acute providers, which added additional stress on the ongoing nursing shortage in post-acute settings.
   
   Although the FTC's ban on non-competition clauses may mitigate some of the staffing challenges, as post-acute staff may face fewer hurdles when seeking new employment, the FTC ban has affected employers' ability to ensure adequate staffing in post-acute settings. We anticipate ongoing staffing challenges to cause compliance concerns, which may invite heightened regulatory scrutiny on post-acute providers.
   
   
5. Behavioral Health Continues to Grow in Post-Acute. With the rise in occupancy levels in post-acute facilities, there has been an associated rise in demand for mental health, behavioral health, and substance use disorder (SUD) services in post-acute settings. This year saw the passage of the 42 C.F.R. Part 2 Final Rule, new regulations to increase parity between behavioral health and medical benefits with private insurers, and revised Medicare Advantage rules for behavioral health cost-sharing. These changes demonstrate heightened federal attention to behavioral health matters, especially in older populations.
   
   The rise in demand for behavioral health services has led to a bottleneck in the rates of discharge from inpatient settings to post-acute settings. Although some states license transitional housing for behavioral health patients discharging from inpatient settings, the diminished supply of post-acute providers, especially those offering behavioral health services, continues to impact discharge rates.
   
   There will likely be a continued rise in the demand for, and a likely increase in the supply of, behavioral health services in post-acute settings. In addition, we anticipate ongoing challenges in discharging older patients with behavioral health diagnoses from inpatient to post-acute care settings. These discharge challenges may persist throughout the nursing shortage but could be mitigated by the increase in behavioral health service availability in post-acute facilities.

About the Authors:

Mark Furnish focuses on health care law, government relations, and public policy matters. With more than 25 years of experience, Mark helps clients understand and navigate the complex regulatory processes.

Tyler Strobel focuses his practice on health care compliance, regulatory matters, and transactions across a range of health industries, including behavioral health, telehealth, and post-acute care. He advises health care providers on federal and state health care regulatory matters, including Medicare and Medicaid reimbursement and billing disputes, Stark Law, Anti-Kickback Statute, HIPAA and HITECH, 42 CFR Part 2, health facility licensure, practitioner licensure and scope of practice laws, and Medicare and Medicaid enrollment.