CMS’ Final Rule: Is it a win for residents?

The Obama administration is working hard to finalize as many sets of administrative regulations as possible. Whether these regulations stick in January will depend on the November election.

So who could possibly be the target of expanded regulations? Long-term care, of course.

Recently the Center for Medicare and Medicaid Services issued a set of regulations entitled “Medicare and Medicaid Programs; Reform of Long-term Care Requirements,” scheduled to be published in the Federal register on October 4, 2016.

The regulations are 713 pages, but who is counting?

The requirements come in three phases, with Phase one effective on November 28, 2016, Phase 2 in 2017 and Phase 3 in 2019. To be accurate, many of the regulations are carry forwards of existing regulations, but with some new twists.

Digesting this monster document will take some time, but certain providers should take note of the provision prohibiting mandatory arbitration agreements in admissions packages, or any “pre-dispute” agreement. Providers prefer arbitration agreements in order to avoid costly litigation and to protect against runaway jury awards in malpractice cases.

Resident advocates argue that arbitration agreements buried in thick admissions packages are intentionally hidden, and already stressed family members and ill residents are not able to provide informed consent during the arduous, paper intensive admissions process.

At this point the resident advocates have won.

It is possible there will be litigation challenging the regulation as being outside the scope of administrative authority. This will take some time, and the outcome is uncertain.

Technically, the arbitration agreement may still be legal in your state, and a facility can currently use the agreement, but the facility will not be paid by either Medicare or Medicaid funds. This is the sledgehammer approach to regulation!

The Affordable Care Act contained a requirement that long-term care facilities have a compliance program by October 23, 2013. The regulations were not ready on time and were finally dropped into the massive regulations package issued this week.

In the past a compliance program was highly recommended, so highly recommended that it was de facto mandatory for effective management. The new regulations make it really, truly mandatory, with an effective date of November 28, 2017.

If a facility does not have a compliance plan, it should not wait more than a year to comply. In a highly regulated environment enforced by numerous criminal laws and civil sanctions, a compliance program has really been necessary all along.

The heart of a compliance program is billing integrity. When you ask the government for a check, you are certifying the billing is accurate. Facilities are subject to the false claims act and the anti-kickback statute, in addition to other civil and criminal penalties.

Billing integrity is not the end of a compliance program. Given the massive regulatory program facing long-term care facilities, the program must be broader. The regulations delineate a minimal standard as well as a standard for groups with five or more facilities. Facilities are free to exceed the minimum expectations and a more robust program is advised.

Is a compliance program more expense and work with no benefit? No; it should be much more. A compliance plan can prevent government sanctions and also can serve as a performance audit for numerous aspects of your operations. The “self-survey” used by many facilities are a preliminary approach to the state survey which is a type of performance audit that ties nicely to a compliance program.

Where to obtain guidance on a compliance program? The Department of Health and Human Services Office of Inspector General offers direction for some, in the form of a series of guidance documents. Numerous trade associations, consultants and law firms also provide direction on successful compliance programs.

Read the entire CMS Final Rule document.

Tom Ealey is a professor of business administration at Alma College in Alma, Michigan. He has extensive long-term care experience, including research interests in healthcare regulatory issues and compliance, healthcare quality failures, and financial fraud. He can be reached at Elizabeth Cameron, JD, MBA, is a professor of business administration at Alma College and a practicing attorney. She can be reached at



Topics: Articles , Executive Leadership , Medicare/Medicaid , Regulatory Compliance