Crackdown on nursing homes’ use of arbitration may lead to lawsuits
The nursing home industry may end up suing the Obama administration over its move to preserve residents’ right to sue the facilities when disputes arise.
A new CMS rule will bar nursing homes from compelling residents to settle disputes in arbitration as a condition of admission. Beginning Nov. 28, facilities are prohibited from entering binding arbitration agreements at any time before a dispute arises.
The provision takes aim at a common practice among nursing homes of requiring new residents to agree to binding arbitration and waive their right to take the facility to court as part of the stack of paperwork they or their families fill out when they arrive. It goes much further than the restrictions proposed in the draft rule and drew a swift and harshly worded response from one of the industry’s largest trade groups.
The American Health Care Association said in a statement that the prohibition “clearly exceeds CMS’ statutory authority and is wholly unneces- sary to protect residents’ health and safety.” The group said it is “considering the appropriate steps for it to take in light of this unjustified action.”
Leading Age, the other major trade group that represents nursing homes, similarly asserted that the agency overstepped its authority. “Arbitration agreements should be enforced if they were executed separately from the admission agreement, were not a condition of admissions, and allowed the resident to rescind the agreement within a reasonable time frame,” Leading Age said in a statement.
The 713-page final rule—the first significant change to the conditions of Medicare and Medicaid participation for the facilities since 1991— also introduces new requirements aimed at improving the quality of care and reducing unnecessary hospital readmissions.
The facilities, for example, will have to provide discharge planning by an interdisciplinary team, provide discharged residents and their caregivers with information about follow-up care and make sure care instructions are conveyed to receiving facilities and any other organization that will provide services.
The CMS received more than 10,000 comment letters on the draft version of the regulations issued last July. Leading Age praised the agency for walking back a requirement for an attending physician to evaluate residents before non-emergency transfers. But the group balked at the sweep of new staff training requirements and a new mandate for facility-wide assessments intended to align staffing levels and expertise with the specific needs of the residents.
The CMS estimates the policies will cost the industry $831 million in the first year the rule is in effect and $ 736 million per year for subsequent years.
Beginning Nov. 28, facilities are prohibited from entering binding arbitration agreements at any time before a dispute arises.