July 28, 2010
CMS Publishes Proposed Rule Regarding Nursing Facility CMPs for Noncompliance with Medicare/Medicaid Program Requirements
A Health Care Reform Express Bulletin
Past Issues of Health Care Reform Express
The July 12, 2010 issue of the Federal Register included a new Proposed Rule from the Centers for Medicare and Medicaid Services (CMS) implementing changes included in the Patient Protection and Affordable Care Act (PPACA) affecting civil monetary penalties (CMP) for nursing homes that fall out of compliance with Medicare and Medicaid participation requirements. The proposed regulations:
- Establish an escrow account for CMP payments;
- Provide for a 50% reduction of a CMP for nursing homes that self-report and promptly correct their noncompliance;
- Create an independent informal dispute resolution process for challenging findings of noncompliance; and
- Propose acceptable uses for CMPs collected by CMS.
According to CMS, the intent of the PPACA provisions and the Proposed Rule is to motivate nursing homes to maintain continuous compliance with basic expectations regarding the provision of quality care and eliminate a facility’s ability to significantly defer the direct financial impact of an applicable CMP until after an often long litigation process. Details about each of these proposals are set forth below.
Establishment of an Escrow Account for CMP Payments
Under the current process, nursing homes often avoid paying a CMP imposed for noncompliance with Medicare and/or Medicaid participation requirements for years while they exhaust all of their administrative appeals. Both the General Accounting Office (GAO) and the Office of Inspector General (OIG) noted that significant time often lapses between the identification of noncompliance and the facility’s payment of an imposed CMP, and that such time lapse insulates the facility from the repercussions of enforcement and may undermine the deterrent effect of the sanction. As a result of a GAO study of nursing home CMPs, the GAO recommended legislative change to allow for collection of CMPs before a nursing home has exhausted all of its appeals.
Section 6111(a) and (b) of PPACA permits the Secretary of the Department of Health and Human Services to collect and place CMPs into an escrow account pending the resolution of any formal appeal filed by the nursing home. The CMP would not be collected until after the facility has gone through the independent informal dispute resolution process (described below), although the per-day penalty can begin to accrue as early as the date the facility is determined to be noncompliant (and can even be retroactive to the date of the adverse event that was documented through the survey process to have occurred prior to the issuance of a formal written notice of the CMP). According to CMS, Congress’s intent was to speed and strengthen the motivational and deterrent effects of CMPs, and that suspending the accrual of a CMP while the underlying noncompliance was informally challenged undermined those effects.
CMS has proposed to collect and place CMPs into escrow accounts pending the resolution of the facility’s formal appeal of the finding of noncompliance. Under this proposal, if the facility is ultimately successful through the formal appeals process, the CMP amount held in escrow will be returned to the facility, with interest, following the expiration of the time for CMS to appeal the ALJ decision or, if CMS does appeal, the Departmental Appeals Board’s affirmation of the ALJ’s reversal of the CMP. The CMP would not be collected from the facility to be placed into escrow until the independent informal dispute resolution process (described below) is complete, or 90 days has passed since the notice of imposition of the CMP (whichever is earlier). If this proposal is finalized, CMS expects to issue additional guidance in the State Operations Manual (SOM) about how this rule would work.
50% Reduction in CMP for Nursing Homes That Self-Report and Promptly Correct Their Noncompliance
Section 6111 (a) and (b) of PPACA authorized CMS to incentivize nursing homes to report and correct their noncompliance by authorizing CMS to reduce a CMP it imposes by up to 50 percent when CMS determines that a facility has self-reported and promptly corrects its noncompliance. In the Proposed Rule, CMS includes several conditions that would have to be met by a facility in order to qualify for a 50 percent reduction in its CMP:
- The facility must have self-reported the noncompliance to CMS or the State before it was identified by CMS or the State and before it was reported to CMS or the State by means of a complaint lodged by a person other than an official representative of the nursing home.
- The facility must have corrected the noncompliance within ten (10) calendar days of the date the facility identified the deficiency.
- The facility must waive its right to a hearing.
This 50 percent reduction in the CMP does not apply to instances of noncompliance that constitute immediate jeopardy to resident health or safety, or that constitute either a pattern of harm or widespread harm to facility residents, or that resulted in a resident’s death. In addition, the 50 percent reduction is also not applicable to repeat offenders – if the facility received a reduction in the CMP penalty for the same deficiency in the previous year, the facility is not eligible for the 50 percent reduction the following year.
Finally, the Proposed Rule makes clear that if a facility receives this 50 percent reduction in the CMP for self-reporting, the facility will not also be eligible for the 35 percent reduction in the CMP that is already available under existing law to facilities that waive their right to a hearing.
Independent Informal Dispute Resolution Process
The Proposed Rule creates a second avenue for informal dispute resolution for nursing homes that wish to challenge a finding that they are out of compliance with Medicare and/or Medicaid program requirements. This proposed process differs from the existing informal dispute resolution process in several ways:
- Available only when a CMP is imposed (not for non-CMP remedies).
- A user fee will be imposed to cover the expenses of the process (cost will depend on complexity of the case).
- Conducted by an independent state agency, a Quality Improvement Organization (QIO), or state survey agency as long as the participants had no involvement in the initial decision to cite the deficiency and impose the remedy.
The Proposed Rule sets forth the following requirements for this new independent information dispute resolution process:
- Facilities must request independent informal dispute resolution within 30 days of notice of imposition of the CMP.
- The independent informal dispute resolution must be completed within 60 days of the imposition of the CMP.
- A written record of the process will be made prior to the collection of the CMP.
- An involved resident or resident representative, as well as the state ombudsman, must be notified and given the opportunity to provide written comment.
It is not clear how useful or needed this second avenue of informal dispute resolution is, and it seems that even CMS is a bit puzzled as to why this process was created, with CMS delving into legislative history for legislation that was not enacted in order to provide “insight into what prompted the inclusion of this new independent review process.”
Acceptable Uses for CMP Money
Section 6111 of PPACA identified new acceptable uses for CMPs collected by CMS. Some of the acceptable uses involve applying funds directly to the promotion of quality care and the well-being of nursing home residents. PPACA makes clear that all uses of CMP funds must be approved by CMS. In the Proposed Rule, CMS proposes that 50 percent of the Medicare portion of collected CMP amounts be used for activities that benefit nursing home residents and that the remaining 50 percent continue to be deposited to the Department of the Treasury.
CMS also proposes that no CMP funds can be used for survey and certification operations and functions but instead must be used entirely for activities that benefit nursing home residents and that any such activity must be approved by CMS. In distinguishing between Medicare and Medicaid proportions of CMP collections for dually-participating facilities, CMS will return funds to the State in which the noncompliant facility was located in proportion to the relative proportion of Medicare and Medicaid beds at the facility actually in use by residents covered by those programs on the date the CMP began to accrue. The Proposed Rule indicates that CMS is likely to issue guidance that will permit specific uses of the CMP funds without having to get case-by-case approval.
CMS is accepting comments to this Proposed Rule until August 11, 2010.