1. Administration Proposes Allowing Nursing Homes to Require Pre-Dispute Arbitration Clauses as a Condition of Admission
2. CMS Extends Comment Period for New Medicare Skilled Nursing Reimbursement System Until August 25, 2017
3. The Center Welcomes Chiplin Senior Fellow Ben F. Belton
Administration Proposes Allowing Nursing Homes to Require Pre-Dispute Arbitration Clauses as a Condition of Admission
In 2016, the Obama Administration promulgated final regulations that revised and updated the Requirements of Participation, the federal standards of care that nursing facilities must meet in order to be eligible to receive Medicare or Medicaid reimbursement. The Obama rules explicitly prohibit facilities from entering into pre-dispute mandatory arbitration agreement with a resident or resident representative or from requiring a resident to agree to binding arbitration as a condition of admission. The Trump Administration has now published proposed rules that would reverse both of these consumer protections.
The proposed rules not only allow facilities to ask a resident or resident representative to enter into an agreement for binding arbitration but also allow facilities to require a resident to sign such an agreement as a condition of admission. This giant step backwards requires nursing home residents and their families to choose: either waive their rights to sue on any dispute that might arise at any time during their stay (or that caused their death) or be denied admission. The proposed rules are a gift for the nursing home industry, whose sole litigation response to the Obama regulations was a lawsuit (discussed below) challenging their prohibition against mandatory pre-dispute arbitration agreements.
Obama Final Regulations
The preamble to the final rules includes a lengthy discussion of the reasons that led the Centers for Medicare & Medicaid Services (CMS) to prohibit pre-dispute mandatory arbitration contracts. CMS relied on literature review, review of court decisions involving arbitration and nursing facilities, and public comments it received on the proposed rules. In its careful and measured response to the issue, the Obama administration’s agency did not prohibit post-dispute arbitration agreements or invalidate existing pre-dispute arbitration agreements. It only prohibited pre-dispute arbitration contracts going forward.
In the final rules, the Obama CMS first acknowledged that the nursing home industry overwhelmingly urged the agency not to prohibit pre-dispute mandatory arbitration agreements while “members of the public, advocates, and members of the legal community” predominantly supported a firm prohibition. In addition, 34 Senators, three Representatives, 16 state attorneys general, the American Bar Association, and the American Arbitration Association, among others, all endorsed prohibiting pre-dispute arbitration contracts.
Further, the Obama CMS summarized analyses of arbitration in long-term care facilities including:
the unequal bargaining power between the resident and the LTC facilities; inadequate explanations of the arbitration agreement; the inappropriateness of presenting the agreement upon admission, an extremely stressful time for the residents and their families; negative incentives on staffing and care as a result of not having the threat of a substantial jury verdict for sub-standard care; and the unfairness of the arbitration process for the resident.
Thus, the Obama CMS found that arbitration clauses have a detrimental effect on patient safety and that compared to litigation, arbitration as a forum for dispute resolution limits discovery, limits grounds for appeal, is secretive, and does not make decisions publicly available.
Trump Proposed Regulations
The Trump Administration takes a very different approach. It’s proposed rules, published June 8, 2017, explicitly reverse the regulations promulgated just eight months ago. CMS explains that it reconsidered the final rules and concluded that arbitration has advantages for both residents and facilities. In CMS’s new view, arbitration can be less expensive, quicker, and less adversarial than litigation. In addition, CMS concludes that the 2016 final rules underestimated the financial burdens of litigation on nursing facilities.
In a complete turnaround, the Trump Administration proposed rules allow pre-dispute arbitration clauses to be used in nursing home admissions contracts and allow facilities to require residents to sign them as a condition of admission.
Facilities using such pre-dispute arbitration provisions must explain the agreement “to the resident and his or her representative in a form and manner that he or she understands, including in a language that the residents and his or her representative understands.” The agreement must be written in plain language and, if the arbitration provision is included in the admissions contract, the provision must be written in plain language.
A new requirement obligates a facility using binding arbitration agreements to post a notice “in an area that is visible to residents and visitors.”
Deleted from the rules are Obama-era requirements that (1) pre-dispute arbitration agreements be prohibited, (2) the continuing right to remain in the facility not require signing of a binding arbitration agreement, (3) agreements for arbitration be entered voluntarily, (4) the parties agree to a neutral arbitrator, and (5) the venue for arbitration be convenient for both parties.
Retained from the Obama rules are requirements that (1) arbitration agreements not prohibit or discourage residents and others from communicating with health department officials or the ombudsman program and (2) facilities retain copies of signed arbitration agreements for five years, when a dispute is resolved through arbitration, and make them available for inspection by CMS or its designees.
American Health Care Association Litigation
As discussed in the proposed rules, the American Health Care Association and affiliated nursing facilities filed a lawsuit on October 17, 2016, seeking to stop implementation of the prohibition on pre-dispute arbitration agreements. The district court issued a preliminary injunction on November 7, 2016. CMS issued a Survey & Certification Letter on December 9, 2016, directing states not to enforce the ban on arbitration agreements while the injunction remained in effect. The government dismissed its appeal of the issuance of the preliminary injunction on June 2, 2017.
How to Submit Comments on the Proposed Rules
Comments on the proposed regulations must be received by CMS by August 7, 2017. They may be submitted electronically (at http://www.regulations.gov), by regular mail, by express or overnight mail, or by hand or courier. In commenting, use file code CMS-3342-P. The Center for Medicare Advocacy will be submitting comments shortly.
 81 Fed. Reg. 68688 (Oct. 4, 2016).
 42 C.F.R. §483.70(n)(1).
 82 Fed. Reg. 26649 (Jun. 8, 2017), https://www.gpo.gov/fdsys/pkg/FR-2017-06-08/pdf/2017-11883.pdf.
 81 Fed. Reg. 68688, 68790-68800.
 81 Fed. Reg. 68688, 68790.
 81 Fed. Reg. 68688, 68790, 68792.
 81 Fed. Reg. 68688, 68793.
 81 Fed. Reg. 68688, 68793.
 81 Fed. Reg. 68688, 68794.
 82 Fed. Reg. 26649, 26650-26651 (Jun. 8, 2017).
 Proposed §483.70(n).
 Proposed §483.70(n)(1)(i).
 Proposed §483.70(n)(1)(ii).
 Proposed §483.70(n)(1)(i).
 Proposed §483.70(n)(4).
 42 C.F.R. §483.70(n)(1), (n)(2)(iii).
 42 C.F.R. §483.70(n)(2)(iii).
 42 C.F.R. 483.70(n)(2)(ii)(A).
 42 C.F.R. §483.70(n)(2)(ii)(B).
 42 C.F.R. §483.70(n)(2)(ii)(C).
 42 C.F.R. §483.70(n)(2)(iv) and proposed §483.70(n)(2).
 42 C.F.R. §483.70(n)(2)(vi) and proposed §483.70(n)(3).
 American Health Care Association v. Price, No. 3:16-CV-233 (D. MS).
 CMS, “ Long-Term Care (LTC) Regulation: Enforcement of Rule Prohibiting Use of Pre-Dispute Binding Arbitration Agreements is Suspended so Long as Court Ordered Injunction Remains in Effect,” S&C: 17-12-NH (Dec. 9, 2016), https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/SurveyCertificationGenInfo/Downloads/Survey-and-Cert-Letter-17-12.pdf.
CMS Extends Comment Period for New Medicare Skilled Nursing Reimbursement System Until August 25, 2017
On May 4, 2017, the Centers for Medicare & Medicaid Services (CMS) published an Advance Notice of Proposed Rulemaking setting out options that CMS is considering to replace the Medicare reimbursement system for skilled nursing facilities (SNFs). The Center for Medicare Advocacy’s Alert described the proposal at length and the ways it would change financial incentives for SNFs. Likely effects of these changes include a drastic reduction in therapy services in SNFs and a shortened period of Medicare Part A-covered care.
In response to requests from “professional associations and national industry organizations,” CMS has now extended the public comment period to August 25, 2017.
The Center will be drafting comments and will make them available well before the August 25 deadline.
 82 Fed. Reg. 20980 (May 4, 2017).
 Center for Medicare Advocacy, “CMS Considers New Medicare Reimbursement System for Skilled Nursing Facilities: If Implemented, Would Gut Therapy” (CMA Alert, May 17, 2017), https://www.medicareadvocacy.org/cma-alert-may-17-2017/.
 CMS, “Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities: Revisions to Case-Mix Methodology; Extension of Comment Period,” https://www.gpo.gov/fdsys/pkg/FR-2017-06-14/pdf/2017-12324.pdf.
Center for Medicare Advocacy Welcomes Chiplin Senior Fellow Ben F. Belton
Ben F. Belton has joined the Center's Washington, DC office as the Chiplin Senior Fellow in a consulting capacity. Mr. Belton will help the Center enhance current working and funding relationships as well as build new ones. His work will focus on areas related to Medicare beneficiaries under the age of 65, Social Security Disability, Elder Justice, and Health Equity.
Prior to joining the Center, Mr. Belton most recently served in the administration of former President Barack Obama as a Senior Advisor to the Acting Commissioner of the Social Security Administration (SSA). Among his various duties, he managed the development and implementation of strategic outreach initiatives for older Americans and the national aging network. He also worked very closely with the White House and other federal agencies on issues affecting older Americans.
Mr. Belton has over ten years of experience working on aging issues, having also served at the U.S. Department of Health and Human Services, the National Committee to Preserve Social Security and Medicare, and on the 2008 Obama for America campaign. He has presented widely on a range of topics affecting older people and people with disabilities and brings to the Center his expertise in Social Security programs for both populations. He also served on the board of directors of the National Alliance for Caregiving, as a member of the Eldercare Locator Advisory Committee and on the Dementia Friendly America National Council.
Mr. Belton completed his studies in Sociology at Bowie State University in Maryland.