Medicare and Medicaid Programs; Revision of Requirements for Long-Term Care Facilities Arbitration Agreements (CMS-3342-F)

July 30, 2019

NAELA eBulletin:

Today, the Centers for Medicare & Medicaid Services (CMS) announced a final rule, “Medicare and Medicaid Programs; Revision of Requirements for Long-Term Care Facilities: Arbitration Agreements” (CMS-3342-F). The final rule revises the requirements for arbitration agreements when they are used by long-term care (LTC) facilities to resolve disputes with their residents. Provisions in this rule establish substantial protections for residents and their representatives and ensure transparency in the arbitration process in LTC facilities, also known as “nursing homes”. The rule is part of the agency’s five-part approach to ensuring a high-quality nursing home system that focuses on strengthening requirements for nursing homes, working with states to enforce statutory and regulatory requirements, increasing transparency of nursing home performance, and promoting improved health outcomes for nursing home residents.

This final rule repeals the prohibition on LTC facilities entering into pre-dispute, binding arbitration agreements with their residents, as proposed. However, this final rule includes protections of residents’’ rights by prohibiting LTC facilities from requiring residents to sign binding arbitration agreements as a condition of admission to, or as a requirement to continue to receive care at, that facility. It strengthens the transparency of arbitration agreements and the arbitration process with specific requirements for the LTC facility, such as the requirement that LTC facilities that resolve a dispute with a resident through arbitration retain copies of the signed arbitration agreement and the final arbitrator’s decision for five years and make such documents available for review by CMS or its designee. It also protects residents’ rights to make informed choices about their health care by ensuring that residents or their representatives have the right to understand what the arbitration agreement says and the consequences of signing the agreement.

Background

On October 4, 2016, CMS published in the Federal Register a final rule titled, “Reform of Requirements for Long-Term Care Facilities” (81 FR 68688) (2016 final rule). The rule banned binding pre-dispute arbitration agreements in LTC facilities. In 2016, the American Health Care Association (AHCA) and a group of affiliated nursing homes filed a complaint in the U.S. District court for the Northern District of Mississippi seeking a preliminary and permanent injunction enjoining CMS from enforcing the ban on LTC facilities entering into pre-dispute, binding arbitration agreements with their residents. After the court preliminarily enjoined the enforcement of that regulation, the agency determined that further analysis of the rule was warranted. On December 9, 2016, CMS issued a nationwide instruction to State Survey Agency Directors, directing them not to enforce the 2016 final rule’s prohibition of pre-dispute, binding arbitration provisions.

On June 8, 2017, CMSCMS published a proposed rule, “Medicare and Medicaid Programs; Revisions of Requirements for Long-Term Care Facilities: Arbitration Agreements” (82 FR 26649) in the Federal Register. The agency received over 1,000 public comments on the proposed rule from a number of stakeholders, including nursing homes and beneficiary advocates. That proposed rule focused on the transparency surrounding the arbitration process and proposed the following:

  • The prohibition on LTC facilities entering into pre-dispute, binding arbitration agreements with their residents would be repealed.
  • All agreements for binding arbitration must be in plain language.
  • If signing the agreement for binding arbitration is a condition of admission into the facility, the language of the agreement must be in plain writing and in the admissions contract.
  • The agreement must be explained to the resident and his or her representative in a form and manner they understand, including that it must be in a language they understand.
  • The resident must acknowledge that he or she understands the agreement.
  • The agreement must not contain any language that prohibits or discourages the resident or anyone else from communicating with federal, state, or local officials, including federal and state surveyors, other federal or state health department employees, or representatives of the State Long-Term Care Ombudsman.
  • If the 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 it can be inspected by CMS or its designee.
  • The facility must post a notice regarding its use of binding arbitration in an area that is visible to both residents and visitors.

Final Rule Revisions to Arbitration Requirements

After careful consideration of the public comments, CMS is modifying our proposed changes.  We are not finalizing the requirements for plain language in the arbitration agreements and that the facility post a notice regarding its use of binding arbitration. We believe these proposed requirements are unnecessary due to other requirements finalized in this rule.  In addition, we are retaining some of the requirements finalized in the 2016 rule.  We are finalizing following provisions.  An LTC facility must:

  • Not require that a resident or his or her representative sign an agreement for binding arbitration as a condition of admission to, or as a requirement to continue to receive care at, the facility.  This must be explicitly stated in the agreement to ensure.  This ensures that no resident or his or her representative will have to choose between the resident obtaining the skilled nursing care he or she needs and signing an agreement for binding arbitration.
  • Ensure that the agreement is explained to the resident or his or her representative in a form and manner that he or she understands, including in a language that he or she understands, and that the resident or his or her representative acknowledges that he or she understands the agreement.  These two requirements ensure that the arbitration agreement is transparent and the resident or his or her representative understand what he or she is agreeing to.
  • Ensure that the agreement provides for the selection of a neutral arbitrator agreed upon by both parties and a venue that is convenient to both parties.  These requirements helps to ensure that the arbitration process is fair to both parties, especially the residents.
  • Ensure that the agreement does not contain any language that prohibits or discourages the resident or anyone else from communicating with federal, state, or local officials, including Federal or state surveyors, other federal or state health department employees, or representative of the Office of the State Long-Term Care Ombudsman. This protects the resident and his or her representative from any undue influence by the LTC facility to not discuss the circumstances surrounding a concern, complaint or grievance.
  • Retain copies of the signed agreement for binding arbitration and the arbitrator’s final decision for 5 years after the resolution of any dispute resolved through arbitration with residents, and make these documents available for inspection upon request by CMS or its designee.  This will ensure that CMS will be able to obtain information on how the arbitration process is being used by LTC facilities, and on the outcomes of the arbitrations for residents.

For more information, please visit: https://www.federalregister.gov/documents/2019/07/18/2019-14945/medicare-and-medicaid-programs-revision-of-requirements-for-long-term-care-facilities-arbitration