Preventing hospitals and skilled nursing facilities owned by certain firms from participating in Medicare

Section 1862 of the Social Security Act (42 U.S.C. 1395y) is amended by adding at the end the following new subsection:

(p)

Prohibition on payments to hospitals and skilled nursing facilities owned by certain firms

(1)

In general

(A)

Prohibition

No payment may be made under this title to a hospital or skilled nursing facility that is owned or controlled by a covered firm or an affiliate of a covered firm.(B)

Exception

If, on the date of enactment of this subsection, a hospital or skilled nursing facility is owned or controlled by a covered firm or an affiliate of such a firm, such hospital or skilled nursing facility shall not be considered in violation of subparagraph (A) until the date that is 3 years after such date of enactment.(2)

Notice, hearing, and judicial review

Any hospital or skilled nursing facility found to be in violation of paragraph (1) shall be entitled to reasonable notice and opportunity for hearing as described in section 1128(f).(3)

Joint and several liability

A covered firm or an affiliate of such a firm that owns or is an affiliate of a hospital or skilled nursing facility that is in violation of paragraph (1) shall be jointly and severally liable for any penalty or obligation such hospital or skilled nursing facility receives for such violation.(4)

Definitions

In this subsection:(A)

Affiliate

The term affiliate means an entity that controls, is controlled by, or is under common control with another entity.(B)

Control

(i)

In general

The term control means to possess the power, directly or indirectly, to direct, or cause the direction of, the management, administrative functions, assets, or policies of an entity through owning voting securities in such entity, contracting with such entity (except for contracting with such entity for goods or non-management services), or other similar means, as determined by the Secretary.(ii)

Voting securities

A person shall be considered to control an entity if such person directly or indirectly owns, has rights over, or holds with the power to vote, 10 percent or more of the voting securities of such entity.(C)

Corporation

The term corporation means—(i)a joint-stock company;(ii)a company or partnership association organized under a law that makes only the capital subscribed or callable up to a specified amount responsible for the debts of the company or partnership association, and includes a limited partnership and a limited liability company;(iii)a trust; or(iv)an association that—(I)possesses the power or privilege of a private corporation under State law; and(II)does not possess the power or privilege of a sole proprietorship or partnership under State law.(D)

Covered firm

The term covered firm means—(i)a private equity fund;(ii)a corporation that is owned or controlled by a private equity fund; or(iii)a real estate investment trust.(E)

Private equity fund

The term private equity fund means a person who—(i)would be considered an investment company under section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a–3) but for the application of paragraph (1) or (7) of subsection (c) of such section; and(ii)directly, or through an affiliate, acts as a control person of such company.(F)

Real estate investment trust

The term real estate investment trust has the meaning given such term in section 856 of the Internal Revenue Code of 1986.