American Health Care Association Announces Complaint Against CMS for Arbitration Provision Changes in New Regulations

This is another article in a series discussing the complete overhaul of Part 483 to Title 42 of the Code of Federal Regulations, the Requirements for States and Long-Term Care Facilities (“Final Regulations”) by the Centers for Medicare & Medicaid Services (“CMS”).

Background

On September 28, 2016, CMS released a complete overhaul of Part 483 to Title 42 of the Code of Federal Regulations, the Requirements for States and Long-Term Care Facilities. CMS’s Final Regulations cover many regulatory requirements for long-term care facilities and create new compliance obligations for providers. The Final Regulations seek to target rehospitalizations, facility-acquired infections, overall quality and resident safety.

Recently, Hall Render published an overview of Final Regulations components as well as Parts 1, 2, 3 and 4 in the series, which are located here, here, here and here.

Binding Arbitration Agreements – Sec. 483.70

The Final Regulations provide new requirements for facilities that use binding arbitration agreements in Sec. 483.70.

A facility must not enter into a pre-dispute agreement for binding arbitration with any resident or resident’s representative nor require that a resident sign an arbitration agreement as a condition of admission to the facility.
If, after a dispute between the facility and a resident arises, the facility chooses to ask a resident or his or her representative to enter into an agreement for binding arbitration, the facility must ensure that the agreement is explained to the resident in a form and manner that he or she understands, including in a language the resident and his or her representative understand, and the resident acknowledges that he or she understands the agreement.
The agreement must be entered into by the resident voluntarily, and arbitration sessions must be conducted by a neutral arbitrator in a location that is convenient to both parties.
Admission to the facility cannot be contingent upon the resident or the resident’s representative signing a binding arbitration agreement.
The agreement cannot prohibit or discourage the resident or anyone else from communicating with federal, state or local health care or health-related officials, including representatives of the Office of the State Long-Term Care Ombudsman.
Section 483.70 will be implemented in Phase 1, upon the effective date of the Final Regulations, November 28, 2016.

AHCA Announced It Plans to File a Complaint Against CMS

The American Health Care Association (“AHCA”) announced it plans to file a complaint against CMS over the new pre-dispute arbitration agreement prohibition regulation included in the Final Regulations. Plaintiffs listed in the compliant include AHCA and the Mississippi Health Care Association.

The complaint asserts that the arbitration ban violates the Federal Arbitration Act and exceeds CMS’s statutory authority under the Medicare and Medicaid Acts. The complaint further asserts that the ban is arbitrary and capricious—and thus unlawful—because it will needlessly deprive both facilities and their residents of the benefits of arbitration and result in the siphoning of resources toward litigation costs and away from resident care.

AHCA’s complaint asks the U.S. District Court for the Northern District of Mississippi to hold that the arbitration prohibition in the Final Regulations is unlawful and preliminarily and permanently prevents CMS from enforcing that portion of the rule that is set to become effective on November 28, 2016.

Practical Takeaways

Effective November 28, 2016, the Final Regulations will prohibit the use of pre-dispute binding arbitration agreements. This means that a facility may not utilize pre-dispute arbitration agreements at the time of admission to that facility. Facilities and residents will still be able to use arbitration on a voluntary basis at the time a dispute arises.
The complaint filed against CMS may delay implementation of the binding arbitration provisions of the Final Regulations.

If you have questions or would like additional information about this topic, please contact: