On June 1, 2023, Iowa Governor Kim Reynolds signed Iowa House File 685 into law. Iowa House File 685 contains several changes to Iowa’s change of ownership laws for nursing homes.
Changes to Iowa’s Change of Ownership (CHOW) Laws
Iowa House File 685 creates a new Iowa Code Section 135C.7A, which adds to the existing change of owner requirements. Under the new law, before an Iowa license is issued, a new owner must submit documentation showing that the new owner meets all of the following requirements by providing the following information:
- Information regarding all related parties with a five percent or greater controlling interest in the applicant organization, including the related party’s relationship to the applicant organization.
- Information regarding related party transactions and associated reimbursement structures.
- Information on the financial suitability to operate a nursing facility, including financial projections for operational expenses and revenues, such as realistic occupancy and reimbursement rates and the disclosure of any related party transactions, projected for the first three years of operation.
- Information related to the applicant’s regulatory history with any other state or licensing jurisdiction.
- Information relative to any other health care operations under the control and management of the applicant or related parties, which may include, but is not limited to, assisted living programs, hospice services, home health agencies, or other long-term care-related health services.
Licensing Department Escrow Request
Iowa’s licensing department may request that the applicant provide additional information, which may include verification of cash or liquid resources to maintain nursing facility operations for a period of not less than two months. Iowa’s licensing department may also require an applicant to create an escrow account sufficient to sustain the financial operations of the applicant’s nursing facility for a period of not less than two months. The escrow account shall be sufficiently funded by the applicant prior to the issuance of the Iowa nursing facility license.
Practical Takeaways
New Iowa nursing facility operators and Iowa nursing facility operators transferring ownership of nursing facilities need to keep in mind the requirements needed for the new owner to obtain an Iowa license since Iowa has added additional requirements for new Iowa operators.
If you have questions or would like additional information about this topic, please contact:
- Sean Fahey at (317) 977-1472 or sfahey@hallrender.com;
- Brian Jent at (317) 977-1402 or bjent@hallrender.com;
- Todd Selby at (317) 977-1440 or tselby@hallrender.com; or
- Your regular Hall Render attorney.
More information about Hall Render’s Post-Acute and Long-Term Care services can be found here.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer specific questions that would be legal advice.
