New reporting requirements for California SNFs designed to boost transparency

Additional reporting requirements were added to California Senate Bill 650 (SB 650). The bill, approved in 2021, requires certain incremental financial reporting by skilled nursing facilities (SNF) to increase financial and operational transparency. New requirements begin with fiscal years ended Dec. 31, 2023, and will be due within four months after the fiscal year end.

In July 2023, the Department of Healthcare Access and Information (HCAI) published proposed regulatory text, with comments due by Sept. 5, 2023, to implement SB 650. In October 2023, HCAI issued a Notice of Modification to Text of Proposed Rulemaking, with comments due by Nov. 3, 2023.

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

Key impacts

The HCAI regulations 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 (CPA). This includes SNFs licensed pursuant Section 1250, Subdivision C of the Health and Safety Code, with state- and district-operated facilities exempt from requirements.

The report must include:

• Consolidated balance sheet
• Consolidated statement of income
• Consolidated statement of changes in equity
• Consolidated statement of cash flows
• Combined financial statement that separately reports the finances of all entities included in the consolidated financial report as a consolidating schedule
• Statement of patient census, reporting patient days by payer and service type
• Statement of patient revenue, reporting revenue by payer and by routine and ancillary services

The statements of patient census and patient revenue aren’t standardized statements by the Financial Accounting Standards Board and therefore, shall undergo a regulatory audit or review by a CPA to ensure compliance with the