Will Final Medicare Rule Allow Nursing Homes to Force Arbitration?

Stay ahead of developments in federal and state health care law, regulation and transactions with timely, expert news and analysis.

By Michael D. Williamson

Aug. 17 — Contentious updates to a Medicare final nursing home rule involving arbitration clauses are under review by the White House.

Under the proposed rule, if a nursing home includes binding, or pre-dispute, arbitration agreements in their admission contracts, the facility must explain the agreements and the residents must acknowledge they understand them.

Litigators and some consumer advocacy groups have argued that pre-dispute arbitration is unfair to patients and their families and is more likely to benefit nursing home owners. The process removes an individual's right to have their case heard by a judge and jury, and instead moves disputes to private arbitration firms, typically hired by the company accused of wrongdoing. This practice has led to allegations that arbitration firms usually resolve disputes in a way that benefits nursing home owners.

The Office of Management and Budget Aug. 16 started reviewing the final rule, which governs conditions of participation that more than 15,000 long-term care facilities must implement to qualify for the Medicare program, according to the OMB reginfo.gov website.

The Centers for Medicare & Medicaid Services released the proposed rule (RIN:0938–AR61) with the arbitration proposal in July 2015 (134 HCDR, 7/14/15).

A cadre of Democratic officials at the state and federal levels said in October 2015 that the CMS proposal's change to arbitration clauses didn't do enough to protect nursing home patients. The long-term care industry, however, said the CMS didn't have the authority to restrict nursing homes' use of arbitration.

The CMS “was right to recognize how problematic forced arbitration is” in the proposed rule, Sarah Rooney, director of regulatory affairs at the American Association for Justice, an industry group for litigators, told Bloomberg BNA Aug. 17. However, the proposal “would simply green-light the nursing home industry to continue using forced arbitration as long as certain disclosures are made,” she said.

An industry group for the nursing home industry, the American Health Care Association (AHCA) countered that the CMS doesn’t have the authority to regulate the use of arbitration agreements by nursing home operators. Furthermore, the AHCA “doesn’t believe further agency directive” on pre-dispute arbitration “is necessary or possible,” the group's president and chief executive officer, Mark Parkinson, told Bloomberg BNA in an Aug. 17 statement.

Democratic Opposition

Separate comments on the proposal from 26 Democratic House members and 16 state attorneys general urged the CMS to prohibit pre-dispute arbitration clauses in long-term care facility admission contracts.

The AHCA told the CMS to completely withdraw any arbitration-related proposals in the rule.

Moreover, a request from a trial lawyers' group “served as the catalyst for CMS’s arbitration-related proposals,” the AHCA said in comments on the proposal, which were due in October 2015 (200 HCDR 200, 10/16/15).

Other Issues

Discussing other provisions in the rule, the National Consumer Voice for Quality Long-Term Care, a patient advocacy group, is against mandatory pre-dispute arbitration, but is more concerned about what the CMS will do on staffing level requirements in the final rule, Robyn Grant the organization's director of public policy and advocacy, told Bloomberg BNA Aug. 17.

In particular, the CMS should mandate that nursing homes are staffed 24 hours a day by persons licensed as registered nurses , Grant said. She told Bloomberg BNA the current staffing requirement, and the proposed rule, only call for a registered nurse to be at a nursing home eight hours a day. All-day registered nurse coverage is important because they are often the only ones at a skilled nursing facility with the proper training and state licensing who can do an assessment of treatments needed when a patient is having a problem, Grant said.

In addition, Grant said the final rule should specify minimum staff requirements for nursing homes. The current and proposed standards, which call for “sufficient” staffing, are too vague and allows facilities to cut personnel to a level that harms patients, she told Bloomberg BNA.

The AHCA, for its part, “strongly believes that implementation of the final regulations should be staggered over a five-year period,” Parkinson said. Updating the conditions of participation is necessary to reflect current standards of practice, but Parkinson said the proposed regulations are too extensive and “will have a critical impact on skilled nursing center care and divert dedicated staff and resources from the mission of delivering quality outcomes.”

The proposed rule also would ensure nursing home staff members are properly trained on how to care for residents with dementia and in preventing elder abuse.

To contact the reporter on this story: Michael D. Williamson in Washington at mwilliamson@bna.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com

For More Information

The proposed rule is at http://src.bna.com/hOj.

Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Health Care on Bloomberg Law