- Federal District Court in Arkansas Upholds Federal Rule Authorizing Arbitration Requirements in Nursing Home Contracts
- Federal Court Orders Appeal Rights for Some Observation Status Patients: More Advocacy is Needed
- Elder Justice Newsletter, Vol. 2 Issue 8 Now Available
- Free Webinar: Medicare: (1) An Overview of COVID-19 Coverage-Related Updates, and (2) DME Coverage and Case Studies to Obtain Equipment
- Register for the VIRTUAL National Voices of Medicare Summit and Senator Jay Rockefeller Lecture – April 30, 2020
In a summary judgment decision, Federal District Court Judge Timothy L. Brooks sustained regulations promulgated by the Trump Administration that permit pre-dispute arbitration agreements, with resident protections, which replaced the Obama Administration’s prohibition of pre-dispute arbitration agreements under all circumstances. Northport Health Services of Arkansas v. United States Department of Health and Human Services, Case No. 5:19-CV-5168 (W.D. Ark., Apr. 7, 2020).
Following the publication of the final Obama regulations on October 4, 2016 (81 Fed. Reg. 68688, 68790), the American Health Care Association and individual nursing homes challenged the ban on pre-dispute arbitration agreements. A federal district court in Mississippi granted them a nationwide preliminary injunction on November 7, 2016, American Health Care Association v. Burwell, 217 F.Supp.3d 921 (N.D. Miss. 2016). The ban on arbitration never went into effect.
The Centers for Medicare & Medicaid Services (CMS) engaged in notice and comment rulemaking again, publishing proposed rules in June 2017, 82 Fed. Reg. 26649, 26650 (Jun. 8, 2017), and final rules, 42 C.F.R. §483.70(n) (84 Fed. Reg. 34718, Jul, 18, 2019) that permitted pre-dispute arbitration agreements, with certain resident protections.
On September 4, 2019, nursing facilities challenged four specific provisions of the rules: (1) the prohibition against requiring individuals to sign arbitration agreements as a condition of admission; (2) the requirement that arbitration agreements be explained in a language that the resident understands; (3) residents’ 30-day right of rescission; and (4) the five-year retention requirements. Plaintiffs alleged that the challenged provisions violate the Administrative Procedures Act (APA) by violating the Federal Arbitration Act (FAA); by exceeding the Secretary’s authority under the Medicare and Medicaid statutes; as arbitrary and capricious (because of a lack of empirical evidence to support the rules); and by violating the Regulatory Flexibility Act (by failing to analyze the economic impact of the rule). The court rejects all five arguments.
Defending the rule from the FAA claims, CMS argued that the rule may affect a facility’s ability to participate in the Medicare and Medicaid programs, but that a facility violating the rule could legally enforce an arbitration agreement in court and that a facility “‘could rationally choose to accept a fine as the price for negotiating an agreement the way it wants.’”
Rejecting the FAA claim, the court finds “nothing in the text of the FAA that limits an agency’s prerogatives to place conditions on the receipt of federal funding in order to achieve the goals of the federal program.” The Court finds that the Secretary has authority under the Medicare and Medicaid statutes to promulgate the rules, citing statutory authority to ensure that the requirements for care are “adequate to protect the health, safety, welfare, and rights of residents.” 42 U.S.C. §§1395i-3(f)(1), 1396r(f)(1). Finally, the Court concludes that CMS’s rulemaking was not arbitrary and capricious and did not violate the Regulatory Flexibility Act.
Note: While the decision upholds important resident protections included in the Final Rule, the Center for Medicare Advocacy believes that pre-dispute arbitration agreements are inherently unfair to residents and their families, especially those experiencing a health crisis and seeking immediate access to care. The Center encourages residents and their families to not sign these so-called “voluntary” pre-dispute arbitration agreements.
- For more information, please see the Center’s joint statement with the Long Term Care Community Coalition: https://www.medicareadvocacy.org/cms-finalizes-rollback-of-pre-dispute-arbitration-protections/
In order to qualify for Medicare-covered skilled nursing facility (SNF) care, Medicare beneficiaries must be an inpatient of a hospital for at least three consecutive days, not including the day of discharge. Unfortunately, beneficiaries are too often either admitted to hospitals as outpatients on observation status or have their status changed to outpatient observation after being admitted as inpatients. Although beneficiaries on observation status often receive the same services as inpatients and may be in the hospital for more than three days, their classification precludes them from qualifying for Medicare-covered SNF care, regardless of their medical need for such services.
To inform beneficiaries about their admission status, hospitals are required to give patients the Medicare Outpatient Observation Notice (MOON). The notice tells beneficiaries about their observation status and the effects of this status on Medicare cost-sharing and SNF services. The notice must be given to beneficiaries who remain in observation status for more than 24 hours, and it must be provided within 36 hours of observation services being initiated. Hospitals must also orally explain observation status and its financial consequences to beneficiaries. However, unlike other Medicare notices, issuance of the MOON does not give patients appeal rights; patients have not been able to appeal their observation status to Medicare.
Since 2011, the Center for Medicare Advocacy has been pursuing a nationwide class-action lawsuit, Alexander v. Azar, to seek appeal rights for beneficiaries placed on observation status. On March 24, 2020, Judge Michael P. Shea of the U.S. District Court for the District of Connecticut held that beneficiaries whose status is changed from inpatient to observation by their hospital are deprived of their property interest in Medicare Part A coverage. Judge Shea found that the Secretary of the U.S. Department of Health and Humans Services violated “the Due Process Clause of the Fifth Amendment by denying the members of the modified class the right to challenge the denial of their Part A coverage.” The court ordered the Secretary to provide these beneficiaries timely notice of their procedural rights and to allow them to appeal for Medicare Part A coverage of their hospital stays. Details of how that will actually work are not yet known, as explained on the Center for Medicare Advocacy’s Frequently Asked Questions page.
The Alexander court limited its holding to beneficiaries who are changed from inpatient status to observation status in the hospital. In other words, the decision does not apply to beneficiaries who are in observation status for their entire hospitalization, or who are only changed from observation to inpatient status. This was based on Judge Shea’s view that only changes from inpatient to observation can be attributed to the application of government rules. Nevertheless, Judge Shea did leave open the possibility of extending appeal rights to a larger group of beneficiaries, determining that “[t]he Secretary may provide greater procedural protections than the ones described above, and may provide these protections to a broader class of beneficiaries, provided that the due process rights of the class members are fully protected as set forth above.”
While appeal rights for beneficiaries in observation status are critical and may provide relief for the beneficiaries included in the court’s decision, as long as observation status continues to block access to medically necessary SNF care, more policy advocacy is needed. We continue to ask Congress to pass the Improving Access to Medicare Coverage Act (H.R. 1682/S.753), which would count all time spent in the hospital for purposes of satisfying the three-day inpatient hospital stay requirement for SNF coverage.
Note: CMS is temporarily waiving the three-day inpatient hospital stay requirement for Medicare beneficiaries affected by the COVID-19 pandemic. For more information, please read our alert, “CMS Temporarily Waives Medicare Access Barriers for Skilled Nursing Facility Care.”
Elder Justice: What “No Harm” Really Means for Residents is a newsletter published by the Center for Medicare Advocacy and the Long Term Care Community Coalition. The purpose of the newsletter is to provide residents, families, friends, and advocates information on what exactly a “no harm” deficiency is and what it means for nursing home residents. Our latest issue has real stories from nursing homes in New York, Nevada, Pennsylvania, and Michigan.
- Read the full issue at https://medicareadvocacy.org/wp-content/uploads/2020/04/Elder-Justice-Vol.-2-Issue-8.pdf
Wednesday April 22, 2020, 3:00 PM – 4:30 PM EDT
Join us for a webinar that explores Medicare issues and addresses your questions about:
- (1) An overview of changes to Medicare coverage during the COVID-19 emergency, including expansions in telehealth coverage and remote patient monitoring, removal of physician referral requirements, and more flexibility in obtaining prescription medications,
- (2) The Medicare process to obtain durable medical equipment, during and outside a public health emergency including: Medicare rules and requirements; Case studies to illustrate the process and tips to ensure safe, efficient, and effective success; and Policy discussions to explore DME that Medicare currently does not cover, but should cover in the future.
Sponsored by the Christopher & Dana Reeve Foundation.
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Because of the need for social distancing brought about by COVID-19, the Center for Medicare Advocacy altered plans for our National Voices of Medicare Summit and Sen. Jay Rockefeller Lecture. This year we will provide a Virtual Summit on April 30, 2020. We are grateful to the 2020 Sen. Jay Rockefeller lecturer, Wendell Potter, and the many other experts who have agreed to present remotely. The Center will also provide a free follow-up webinar for Summit registrants on May 20, 2020.
These events support the work of the Center for Medicare Advocacy.
Register now for what will be a fantastic virtual program and informative webinar.
Virtual Summit: Whither Medicare – From Promise to Privatization
April 30, 2020, 1:00 PM EDT- 4:00 PM EDT
Registration includes free Follow-up Webinar,
Medicare Matters in Challenging Times
on May 20, 2020 2 – 3 PM EDT
The Virtual National Voices of Medicare Summit & Senator Jay Rockefeller Lecture will allow leading experts and advocates to consider best practices, challenges and successes in efforts to improve access to quality health coverage and care, especially in these trying times. Against the backdrop of issues like increasing privatization of Medicare, COVID-19, voter focus on health care, and the talk about a Medicare for All, the 2020 Virtual Summit will focus on the promise, challenges to, and future of Medicare and health care.
Register Today at: https://www.medicareadvocacy.org/summit/