Medicare Agency Proposal Backtracks on Long-Term Care Arbitration

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By Mike Stankiewicz

Nursing homes would once again be allowed to require their residents to sign pre-dispute binding arbitration agreements, under a Medicare agency proposed rule.

The proposal [ RIN 0938-AT18], filed June 5, would revise some requirements of a Centers for Medicare & Medicaid Services final rule, “Reform of Requirements for Long-Term Care Facilities Final Rule.” That rule was published in the Federal Register Oct. 4, 2016, and listed the requirements long-term care facilities needed to follow if they asked residents to sign agreements to engage in binding arbitration.

The use of arbitration agreements has long been controversial in the long-term care setting. Although they protect nursing homes from lawsuits filed by family members who believe their loved one was treated poorly, critics say some families and patients who sign such agreements don’t fully understand that they are waiving important legal rights.

Shortly after the final rule was issued in 2016, the American Health Care Association, a Washington-based trade group that represents long-term care facility operators sued for preliminary and permanent injunctions to stop the CMS from enforcing the ban on pre-dispute agreements. The court granted a preliminary injunction on Nov. 7, 2016.

The CMS said it reviewed and reconsidered the arbitration rule following the court’s decision. The original version of the final rule was estimated to cost $831 million in the first year and $736 million per year in subsequent years. The 713-page final rule was considered the biggest revamp of long-term care regulations in more than 30 years.

The new proposal would require all agreements for binding arbitration to be in plain language, and a resident would have to acknowledge that he or she understood the agreement.

Other proposed changes include making facilities post a notice regarding its use of binding arbitration in an area that is visible to both residents and visitors, and if a facility resolves a dispute with a resident through arbitration, it must retain a copy of the signed agreement for binding arbitration and the arbitrator’s final decision so that it can be inspected by the CMS.“These proposed revisions would help strengthen transparency in the arbitration process, reduce unnecessary provider burden and support residents’ rights to make informed decisions about important aspects of their health care,” the CMS said in a June 5 factsheet.

Response from the AHCA

The AHCA, which originally filed the suit against the CMS, praised the agency’s proposed rollback.

“Arbitration has been proven and tested to be fair and effective. Arbitration produces swifter resolution to disputes, compensates residents without undue litigation expense for either party, and reduces the funding burden on the Medicare and Medicaid programs,” the organization said.

“We greatly appreciate CMS and the Trump Administration for making the determination that this ban is not in the best interest of our nation’s millions of patients, residents and families, and the providers who care for them.”

Comments on the CMS’ proposal are due Aug. 7.

To contact the reporter on this story: Mike Stankiewicz in Washington at

To contact the editor responsible for this story: Brian Broderick at

For More Information

The CMS factsheet is at

The proposed rule is at

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