In a final rule published today in the federal register (“Final Rule”), CMS announced numerous changes to the consolidated Medicare and Medicaid requirements for participation for long term care (LTC) facilities (42 CFR part 483, subpart B), which take effect on November 28, 2016 (see the March 7, 2016 blog for information about the July 16, 2015 proposed rule (“Proposed Rule”)). Much to the satisfaction of elder care advocates, the Final Rule provides that nursing homes may no longer require prospective nursing home residents to agree to binding arbitration. This strikes a blow at LTC facilities, which generally used arbitration as a tool to avoid incurring the onerous costs associated with litigation.

CMS’ position in the final rule isn’t shocking as it had expressed concern about the use of arbitration agreements in nursing homes in its Proposed Rule. Although no longer permissible for LTC facilities to use as a condition of admission, according to Andy Slavitt, CMS’ Acting Administrator, and Kate Goodrich, Director of the Center for Clinical Standards & Quality, “facilities and residents will still be able to use arbitration on a voluntary basis at the time a dispute arises.” However, such agreements will still need to be “clearly explained” to residents.

Nursing homes that have traditionally asked residents to sign binding arbitration agreements should revisit their admissions processes and implement revised policies and procedures to ensure compliance with the Final Rule, so that, beginning November 28, 2016, residents at such LTC facilities are no longer required to agree to binding arbitration. LTC facilities may also consider revising their policies and procedures to incorporate recommending the use of arbitration to residents following disputes that may arise, and to ensure that any such recommendations are clearly explained to their residents.