CMS Issues Final Rule Overhauling SNF/NF Requirements of Participation

by Bradley Arant Boult Cummings LLP

Bradley Arant Boult Cummings LLP

The Centers for Medicare & Medicaid Services (CMS) issued a wholesale revision to the rules governing long term care (LTC) facilities on September 28, 2016. Prompted by the changing population of nursing homes which have become more diverse and clinically complex over the past couple of decades, CMS released a proposed rule in the summer of 2015 (the Proposed Rule), which garnered around 10,000 comments. The Final Rule, which will be enforced in three phases, with the regulations included in Phase I becoming effective on November 28, 2016, presents a significant impact on LTC facilities, both operationally and financially. This article highlights some of the major provisions of the Final Rule, and includes a proposed Action Plan for LTC facilities to implement and operationalize the Final Rule and a summary of the Phased Implementation of the Rule.

Summary of Select Major Provisions

Resident Rights and Facility Responsibilities (§483.10) : Consistent with CMS’ overall goal of creating “person centered” requirements, the Final Rule implements several resident rights, including choosing a roommate, when practicable; choosing the attending physician; receiving notices verbally and in writing (including Braille) in a format and language the resident understands; and in the case of a resident deemed incompetent by the state court, having a same-sex spouse render decisions if the marriage is valid in the jurisdiction in which it was formed.

The Final Rule also includes a new “Facility Responsibilities” section at §483.11, which now combines many of the regulations addressing facility responsibilities which were previously dispersed throughout the existing provisions regarding resident rights and quality of life. Facilities should closely review the new §483.11(h) [Grievances] that requires each facility “ensure that residents know how to file grievances,” requires “a facility grievance policy to ensure the prompt resolution of grievances,” and calls for the appointment of a facility “Grievance Officer.” The facility would also be surveyed on how it responded to the grievance and whether it took any of a number of required actions in response to a grievance.

Together, the two sections (§483.10 & 11) create a comprehensive section that includes, in a single location, both statements of resident rights and, co-located, the attendant facility responsibilities to support those rights.

Physician Services (§483.30) : CMS removed the requirement from the Proposed Rule for a physician or physician extender to conduct an in-person evaluation prior to a resident’s transfer. Several commenters addressed this controversial requirement, expressing concerns that sufficient physicians (or other professionals) are not available to every LTC facility to meet this requirement, and that determining the breadth or narrowness of “non-emergency care” could delay access to needed treatment if residents are kept waiting before transfer. The Final Rule specifies that, in addition to a physician’s recommendation that the individual be admitted to a facility, orders for the resident’s immediate care and needs at the time of admission must be provided by a physician, a physician assistant, a nurse practitioner, or a clinical nurse.

Staffing, Staff Competency and Training and (§483.95) : CMS added a new section setting forth competency and training requirements for all staff members. Rather than imposing a staff-to-resident ratio requirement, the Final Rule adds a “competency requirement” for sufficient staffing. The facility must have sufficient staff competent in the skills needed to care for each resident’s needs (see §483.3). Moreover, this staffing determination must be based on a facility-wide assessment of residents, including consideration of the number of residents, resident acuity, range of diagnoses, and the content of care plans to specifically determine what resources are needed for proper care (see §483.70(e)).

LTC facilities must also conduct an “effective” training program for new and existing staff, contractors, and volunteers (see §483.95). Training must educate staff on activities constituting abuse, neglect, exploitation, and misappropriation of resident property and procedures for reporting incidents. The Final Rule at §483.40 also requires sufficient staff to provide behavioral health needed by residents, as well as behavioral health training to all facility staff (at §483.95(i)).

Compliance and Ethics (§483.85) : Under the Final Rule, operators must develop, implement and maintain a comprehensive compliance and ethics program. CMS delayed implementation of this requirement until Phase 3 (November 2019), however. As required by the Final Rule, an “effective” compliance and ethics program must include written compliance and ethics standards, policies, and procedures; high-level officials, such as the chief executive officer, to oversee compliance with the program; and appropriate action in the event of a violation. The Final Rule imposes the following additional requirements on organizations with five or more facilities: a mandatory compliance and ethics training program on an annual basis; selection of a compliance officer whose job duties include a "major responsibility" for the compliance program; and appointment of a compliance liaison at each individual facility.

Arbitration (§483.70) : While it is a relatively small section of the Final Rule, the new prohibition against the use of pre-dispute binding arbitration agreements is generating enormous controversy among providers and will likely lead to litigation in the coming months. In the Final Rule, CMS bans pre-dispute agreements for binding arbitration, citing the disparity in bargaining power between LTC facilities and their residents, among other concerns. LTC facilities may still enter into binding arbitration agreements with residents after a dispute arises if the LTC facility ensures, among other requirements, that the arbitration agreement is explained to the resident and the resident’s representative in an understandable manner, the resident acknowledges his or her understanding of the agreement, and the agreement provides for the selection of a neutral arbitrator and a mutually convenient venue. In what appears to be an attempt by CMS to avoid violating the Federal Arbitration Act, the Final Rule does not affect already-existing pre-dispute arbitration clauses; it prohibits their use only as of November 28, 2016.

QAPI (§483.75) : In response to the Affordable Care Act directive for the Secretary of the Department of Health and Human Services (the Secretary) to establish and implement a quality assurance and performance improvement (QAPI) program requirement for LTC facilities, the Final Rule requires all LTC facilities to operate a data-driven QAPI program, reflected in each facility’s QAPI plan, focused on indicators of outcomes of care and residents’ quality of life. Similar to the previous quality assurance requirements, the QAPI program entails monitoring and evaluating performance of all services and programs of a facility, including services provided under contract or arrangement. Unlike quality assurance, however, the QAPI program optimizes quality improvement activities and programs comprehensively and proactively, even in areas without any specific deficiencies. The QAPI requirements do not replace the QAA committee requirements, but rather, enhance and require coordination with these requirements. The most contentious aspect of the QAPI rule is the new disclosure requirement. The Final Rule also modifies the protections of quality assessment committee records from disclosure. The Rule provides that a facility must present documentation and evidence of ongoing QA and QAPI program implementation and compliance with those regulation requirements to a CMS or a state or federal surveyor upon request. This appears to further invade a facility’s ability to have protected QA records and creates uncertainty about how protections in state law apply to these records. This mandated disclosure creates a risk identified by commenters to the Proposed Rule that, without protections keeping QAPI documentation private, a candid and thorough review of identified concerns and efforts to improve is unlikely to occur.

Phased Implementation : In response to overwhelming comments from the industry and given the comprehensive nature of the regulatory revisions, CMS agreed to implement certain parts of the regulatory changes in the Final Rule over a longer period of time. CMS believes a three-year phased implementation is sufficient, and there will be three phases: Phase 1 on November 20, 2016; Phase 2 one year later in November 2017; and then all regulations will be implemented by November 2019. To assist in identifying when the various parts of the Final Rule are effective, we have included a Phased Implementation Chart with this article at this link.

The Final Rule will also pose many resource burdens and operational challenges for providers and their professional associations, as they make the requisite changes to bring their facilities into compliance with the Rule. Increasing its cost estimates from the Proposed Rule, CMS estimates in the Final Rule that implementation costs will reach $831 million in the first year and $736 million in subsequent years. According to CMS, facility costs will be, on average, approximately $62,900 in the first year and $55,000 in subsequent years. Although it admits it is unable to quantify the benefits of the Final Rule, CMS points to several areas of potential cost savings, including reducing avoidable hospitalizations through enhanced care for residents, changes to food and nutrition services, and permitting physicians to delegate tasks to qualified dietitians and therapists.

Action Plan: With the release of the Final Rule, facilities need to quickly turn their attention towards implementation and compliance with the Phase 1 changes. Hopefully, facilities have been working on implementation based on the Proposed Rule. To assist in that process, Bradley’s attorneys have drafted a suggested Action Plan to create a guide for facilities as they tackle the process of implementing and operationalizing the Requirements of Participation set forth in the Final Rule. You can access or download the Action Plan document at this link.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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