Advocates Praise Ban on Arbitration for Nursing Home Residents

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By James Swann

Sept. 29 — Patient advocacy groups were quick to praise a Medicare final rule banning nursing homes from requiring patients to agree to mandatory arbitration prior to admission, saying it will lead to better patient outcomes.

However, nursing home industry representatives said the Centers for Medicare & Medicaid Services exceeded its authority by banning the arbitration agreements, and said they were considering further action.

The Centers for Medicare & Medicaid Services final rule (RIN:0938-AR61), released Sept. 28, also revises requirements that long-term care facilities must meet to participate in federal health-care programs, including a requirement that all nursing home staff be properly trained to care for dementia patients and prevent elder abuse (189 HCDR, 9/29/16).

With the ban on mandatory pre-dispute arbitration agreements, patients will have the option to file lawsuits when any disputes arise. Moving forward, any arbitration agreements between nursing homes and residents will be voluntary.

The final rule will be published in the Oct. 4 Federal Register and takes effect Nov. 28, though provisions will be phased in over a three-year period.

Informed Decisions

Robyn Grant, director of public policy and advocacy for the National Consumer Voice for Quality Long-Term Care, a consumer advocacy group in Washington, told Bloomberg BNA the CMS final rule restores patient rights to make informed decisions about their care.

“Pre-dispute arbitration forces consumers to make decisions in a vacuum and to decide to pursue arbitration without even knowing what the dispute is,” Grant said.

It's unreasonable to expect patients to understand the type of harm that could occur in the future and its consequences, Grant said.

“Ending pre-dispute arbitration means that should the resident experience harm, he or she or his or her representative will have the knowledge they need to make the decision that is best for them and their situation and can be fully focused on the legal consequences of agreeing to arbitration should they choose that alternative,” Grant said.

The final rule also restores a patient's right to trial by jury, which allows the public to learn about any potentially harmful situations within the nursing home. Since arbitration takes place in private, it prevents the public from ever knowing what's happened, Young said.

“However, when this information is public, as it is in a jury trial, consumers can factor it into their decision about whether or not to seek admission at the nursing home in question,” Young said, which also creates an incentive for nursing homes to improve their care.

The threat of a large lawsuit can be enough to persuade nursing homes to make improvements, Young said.

“This is a victory for consumers that will assist in better ensuring that nursing home residents receive the quality care they are entitled to by law and they deserve,” Young said.

Casey Schwarz, senior counsel for education and federal policy at the Center for Medicare Rights, told Bloomberg BNA the ban on pre-dispute arbitration was a good move by the CMS.

“People entering nursing homes often face a lot of difficult decisions, and they're not in the right place to make the decision to agree to pre-dispute arbitration,” Schwarz said.

Schwarz said that while arbitration certainly has a place, it shouldn't be a mandatory part of a patient's admission to a nursing home.

New York Attorney General Eric Schneiderman said he welcomed the ban on pre-dispute arbitration agreements, according to a statement e-mailed to Bloomberg BNA.

“The rule banning future mandatory pre-dispute arbitration agreements will help protect the rights of consumers who are seeking to become residents of nursing homes and other long-term care facilities, because it will prevent the facilities from requiring those consumers to surrender their rights to assert their claims for relief in court,” Schneiderman said.

Schneiderman said the ban will provide nursing home residents with more options for redress than if they were forced to submit all claims to arbitration.

Schneiderman, along with 15 other state attorneys general, submitted a letter to the CMS in October 2015 calling for the ban on pre-dispute arbitration agreements (200 HCDR 200, 10/16/15).

Rip-Off Clauses

Public Citizen, a consumer advocacy group in Washington, praised the final rule and said it would improve patient standards of care and hold nursing homes accountable for mistreating residents.

Many nursing homes have required incoming residents to sign binding contracts that have included what Public Citizen called “rip-off clauses.”

“These clauses deny nursing home residents access to the courts to seek compensation for fraud, abuse or neglect, forcing them instead to seek redress before corporate-friendly arbitrators, with hearings held in secret and few grounds permitted for appeal,” Susan Harley, deputy director of Public Citizen's congressional watch division, said in a Sept. 28 statement.

Industry Opposition

While patient advocacy groups supported the final rule's ban on mandatory arbitration agreements, the nursing home industry remained opposed.

Mark Parkinson, president and chief executive officer of the Washington-based American Health Care Association, said his organization was “extremely disappointed” by the final rule's ban on pre-dispute arbitration agreements. The AHCA represents about 12,000 not-for-profit and for-profit nursing homes across the country.

“That provision clearly exceeds CMS's statutory authority and is wholly unnecessary to protect residents' health and safety,” Parkinson said in a Sept. 28 statement. Parkinson said the AHCA is considering what actions to take regarding the arbitration ban.

Cheryl Phillips, senior vice president of public policy and health services at LeadingAge, also was disappointed by the ban on pre-dispute arbitration agreements.

Phillips said Washington-based LeadingAge, an association of 5,500 not-for-profit organizations that study aging, has always supported arbitration agreements that offer patients and nursing homes an alternative to litigation.

“We are therefore disappointed that CMS has exceeded its authority and banned all pre-dispute arbitration agreements,” Phillips said in a Sept. 29 statement.

Phillips said arbitration agreements should be enforced if they're separate from an admission agreement and are not a condition of admission.

However, Phillips said LeadingEdge was encouraged by some of the rule's other provisions, including a focus on patient-centered care and the removal of a 48-hour limit for ordering psychoactive medications, which was in the proposed rule. Phillips said the CMS realized the limit could potentially result in patient harm.

Implementation Dates

The ban on mandatory pre-dispute arbitration agreements begins Nov. 28, but other sections of the final rule won't be implemented until as late as three years from the effective date.

For example, a provision requiring nursing homes to provide necessary behavioral health-care services to residents won't be implemented until Nov. 28, 2017, and a provision requiring nursing homes to develop quality assurance and performance improvement programs won't be implemented until Nov. 28, 2019.

The estimated cost to nursing homes for the first year of implementation was $831 million, dropping to $736 million in future years. The CMS estimated the final rule's average cost per facility at roughly $62,900 in the first year of implementation and $55,000 per year moving forward.

The CMS said the three-year implementation schedule was necessary to give nursing homes times to comply with the rule without harming patient care.

To contact the reporter on this story: James Swann in Washington at

To contact the editor responsible for this story: Kendra Casey Plank at

For More Information

The CMS final rule is at .

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