Trying Times For Nursing Homes: How Increased Compliance Practices Can Stem The Next Wave Of DOJ Enforcement

Troutman Pepper

Pepper Hamilton LLP

As the world’s health care facilities grapple with the devastating and unexpected operational struggles brought by COVID-19, nursing homes and long-term care facilities face the added challenge of protecting their residents and staff against COVID-19 while under the federal enforcement microscope. Operational and quality-of-care issues are not new for this industry: America’s nursing homes have long struggled to treat their residents’ significant health issues while navigating declines in reimbursement, difficulties recruiting and retaining experienced staff, and razor-thin margins. Looming over these existing challenges is the prospect of federal and state criminal and civil enforcement actions related to inadequate staffing and quality-of-care issues, a threat that has been percolating since long before the COVID-19 pandemic. This article addresses the specific areas that have garnered the attention of regulators, and offers practical tips on compliance practices to protect against government inquiry and enforcement.

On March 3, 2020, the U.S. Department of Justice (DOJ) unveiled a National Nursing Home Initiative to use criminal and civil enforcement tools against nursing homes that provide grossly substandard care to Medicare and Medicaid beneficiaries. The timing seemed prescient; the initiative launched while the first COVID-19 cases in the United States were just emerging in a Washington state nursing home. Since then, more than 230,000 cases of COVID-19 have been documented in long-term care facilities in 43 states, with 45,833 deaths reported in 40 states. While DOJ’s announcement articulated its intention to pursue “the worst” actors in the industry, some of the factors that DOJ identified as “the most problematic” are noteworthy for all, especially in the wake of COVID-19, including (1) consistently failing to provide for adequate nursing staff, (2) failing to adhere to basic protocols of hygiene and infection control, (3) failing to provide residents with enough food, and (4) withholding pain medication.

There is no question that COVID-19 is highlighting longstanding, complex issues in America’s nursing homes. This public health crisis, coupled with DOJ’s preexisting focus on substandard care, will most certainly bring a tidal wave of enforcement actions against nursing homes in the coming years. These enforcement risks may even be exacerbated by the emergency civil immunity that many states have granted to nursing home operators and staff because, in this environment, qui tam suits and federal enforcement actions become a primary means of ferreting out abuse, neglect and substandard care.

As the industry continues to navigate the impact of COVID-19 and DOJ ramps up its enforcement of nursing homes, it is critical for facility operators to ensure compliance with industry regulations, including the Nursing Home Reform Act and Medicare and Medicaid requirements. Moreover, on May 26, 2020, the U.S. Department of Health and Human Services Office of Inspector General published its strategic plan for COVID-19 response and recovery, and specifically identified audits and evaluations of nursing homes as an action item to protect federal beneficiaries and combat fraud schemes. Facilities should therefore evaluate and enhance compliance programs, as necessary, to best prepare for potential regulatory investigations or inquiries.

The first step in this process is to evaluate existing compliance programs to determine whether they are effective in preventing and detecting criminal, civil and administrative violations and promoting quality of care. Nursing homes should measure their programs against OIG’s Compliance Program Guidance for Nursing Facilities, which describes the elements of an effective compliance program tailored to a nursing home setting. In the current environment, facilities should also enhance and adapt their compliance programs to ensure compliance with the most recent CMS guidance and CDC guidelines on preventing the spread of COVID-19. The following are some practical changes facilities can make to ensure quality care and to better position themselves for the threat of enforcement:

  • Documentation Is Key: Ensure that written policies and procedures are designed to prevent and detect substandard care and neglect, and also that they reflect the latest CMS guidance and CDC guidelines related to preventing and containing infections.

    • As the scientific and medical communities continue to discover more about the spread of COVID-19, best practices are continually updated, and nursing homes should have processes in place to revise, distribute and train on updated policies and procedures immediately.

  • Regular Training: Train employees regularly on best practices to prevent and contain infection, and document that training has been provided.

  • Focus on Staffing: Facilities should pay particular attention to ensuring compliance with staffing requirements. They should also anticipate increased levels of employee illness and implement a coverage plan to ensure that staffing levels are met.

  • Monitoring: Continuous oversight and monitoring are critical to ensuring that a compliance program is effective, and to detecting issues in real time (while there is still an opportunity to remediate them). Facilities should develop a monitoring plan, focused on the factors that DOJ has identified as problematic, that includes both:

    • Review of key information (such as patient census data, staffing schedules, payroll records, patient charts and nutritional information).

    • Live monitoring of day-to-day facility operations. For larger nursing home chains, corporate compliance or quality assurance personnel should visit facilities regularly — sometimes unannounced — and evaluate quality of care, compliance with enhanced hygiene policies, and staffing levels on the ground, in real time.

  • Anonymous Reporting: Remind employees of their right to report concerns or noncompliance with any policies, including COVID-19 protocols and insufficient staffing.

  • Immediately Investigate Reports or Allegations of Misconduct: Facilities should respond quickly and appropriately to all reports or allegations of fraud or misconduct.

    • This includes reviewing records, interviewing staff, and reporting any findings to senior management and/or the board of directors.

    • Investigations should not be undertaken by individuals involved in the allegations.

  • Take Remedial Action: If an investigation reveals any type of misconduct, appropriate disciplinary and/or remedial action should be taken to prevent future occurrences.

    • To the extent a potential violation is found, evaluate whether repayment of federal funds and/or self-disclosure of the conduct is necessary.

  • Prepare Enforcement Response Team: Facilities should develop a plan for responding to any type of inquiry from law enforcement, including identifying lines of communication and reporting and putting together a team to proactively respond to a subpoena or search warrant.

  • Quality-Based Incentives: To the extent possible, facilities should look for opportunities to incentivize facility leadership and staff based, in whole or in part, on quality and compliance measures, instead of a purely revenue-based model.

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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