On October 21, 2022, CMS announced new actions to increase accountability and scrutiny on nursing homes in the Special Focus Facilities Program (SFF Program), an oversight program for the poorest performing nursing homes in the country. The latest revisions to the SFF Program raise the requirements for completing the SFF Program and increase penalties for facilities that fail to meet program standards. This announcement is yet another advancement of CMS’s plan, in coordination with the Biden Administration, to: (i) increase accountability of nursing home owners who repeatedly fail to meet patient safety, licensing, and regulatory requirements for the operation of such facilities; (ii) improve the quality of care provided in nursing homes; and (iii) make nursing homes safer for patients.

The SFF Program identifies the poorest-performing nursing homes in the country to provide increased scrutiny in an effort to quickly improve the care they deliver. CMS, together with states, visit nursing homes at least annually to evaluate the quality of care provided. Facilities with extremely poor survey results may be placed on the SFF Program list. Currently, 88 nursing homes participate in the SFF Program, approximately 0.5% of all nursing homes in the country. Over an 18-month to 24-month period of participation in the SFF Program, participants are inspected twice as often as normal nursing homes—no less than every six months—and are expected to significantly improve quality of care by implementing practices to ensure poor performance is corrected. A facility in the SFF Program may face continued progressive enforcement in the form of civil monetary penalties and denial of Medicare payments while in the SFF Program if improvement is not demonstrated. At the end of the SFF Program, a nursing home either “graduates” the program by passing two consecutive inspections or is terminated from the Medicare and/or Medicaid program.

In its latest amendments to the SFF Program, CMS left much of the existing program intact, but made modifications to increase oversight and penalties—both while facilities are in the SFF Program and after graduation. The key changes made in the revised memo are below.

• Making Requirements Tougher. CMS raised the bar for graduation from the SFF Program. SFF facilities must now complete two consecutive standard health surveys with 12 or fewer deficiencies cited at scope and severity level of “E” or less on each survey and with no intervening complaint. Additionally, CMS has added additional criteria that prevent graduation even if the facility successfully achieves two consecutive surveys with 12 or fewer deficiencies. For example, an intervening complaint survey with deficiencies cited at a level of “F” or higher will prevent graduation.
• Oversight Continues After Graduation. In an effort to prevent facility regression following graduation from the SFF Program, CMS will now continue to monitor SFF Program graduates for three years to ensure sustained improvements. If graduates fail to demonstrate compliance post-graduation, CMS has the discretion to impose enhanced enforcement options—including termination from federal healthcare programs.
• Steeper Penalties for Progressive Enforcement. CMS may now impose escalating civil monetary penalties and payment-withholding sanctions on SFFs that fail to demonstrate or maintain improvement in correcting deficiencies on any of the surveys. These progressive penalties are targeted towards facilities showing “little or no effort” toward improving performance. Penalties may increase as the period of noncompliance continues.
• Involuntary Termination. Any SFF that is cited with “immediate jeopardy” deficiencies on any two surveys (standard health, complaint, LSC, or EP) will be considered for discretionary termination of federal Medicare and Medicaid funding.
• Additional Considerations for SFF Selections. States typically focus on survey results and compliance history in selecting nursing homes for participation in the SFF Program. CMS has now acknowledged the role of staff turnover in declining quality of care and directs states to consider a facility’s staffing level when selecting candidates for the SFF Program.
• Increased Engagement between CMS and Facilities. CMS provided for additional engagement between CMS and poor-performing nursing homes through direct and indirect outreach by CMS officials with the goal of helping the facilities to understand the impact of the SFF Program and resources for improvement.

CMS’s announcement also emphasized the efforts nursing facilities can take to support performance improvement, such as engaging CMS Quality Improvement Organizations, hiring external consultants, implementing evidence-based interventions, and documenting changes such as staffing levels and leadership updates.

These modifications to the SFF Program are effective immediately. CMS’s October 21, 2022, press release is available here. CMS’s memo revising the program is available here. Additional information on the Biden administration’s recent efforts to scrutinize nursing home quality and the role of private equity ownership of nursing homes is available in the Client Alert available here.