CMS Discourages Use of Civil Monetary Penalties as Enforcement Tool Against Nursing Homes

The Centers for Medicare and Medicaid Services (CMS) has taken action to scale back the use of civil monetary penalties (CMPs) against nursing homes, such as skilled nursing facilities (SNFs) and nursing facilities (NFs), that are found to be non-compliant with Federal and / or state requirements. This represents a significant change in CMS’ enforcement strategy. Since 2013, CMS has imposed CMPs against approximately 40% of all nursing homes in the country at least once for serious violations.

Background

Nursing homes are required to maintain compliance with all applicable Federal and state laws, particularly conditions for participation (COPs) in the Medicare and Medicaid programs. In the event that a survey reveals the nursing home is not in compliance with applicable requirements, CMS regulations allow for the imposition of a wide variety of sanctions. In addition to CMPs, potential sanctions include:

• Termination of the facility’s provider agreement.
• Temporary management.
• Denial of payment for Medicare and / or Medicaid services furnished to existing residents.
• Denial of payment for new Medicare and / or Medicaid admissions.
• State monitoring.
• Transfer of residents.
• Transfer of residents with closure of facility.
• Directed plan of correction.
• Directed in-service training.
• Any other alternative or additional remedies imposed by the state and approved by CMS.

Relevant here, existing CMS guidelines contain detailed criteria outlining when and how CMPs may be imposed. Generally speaking, CMS or the state may impose CMPs for the number of days a nursing home is not in compliance with one or more COPs or for each instance that the nursing home is found to be non-compliant. CMP amounts vary based on the type of non-compliance for which the nursing home is cited and are adjusted each year for inflation. In 2017, the amount of potential CMPs available to CMS and the states ranged from $100 to $20,000. Certain factors, such as culpability on the part of the nursing home, the presence of multiple / repeated deficiencies, or a history of non-compliance by the nursing home, may be used to enhance the base CMP amount. In cases where nursing home non-compliance results in immediate jeopardy to the health and safety of residents over the course of several days or weeks, CMPs can easily accrue to hundreds of thousands of dollars.

In cases where the nursing home disputes the finding of non-compliance that served as the basis for imposition of the CMPs, the nursing home may appeal by requesting a hearing with the U.S Department of Health and Human Services or the state. In the event that the nursing home appeals the finding of non-compliance resulting in the CMP assessment, CMS requires that nursing homes deposit the CMP amount into an escrow account pending resolution of the appeal. If the decision on appeal is favorable to the nursing home, the escrowed funds will be returned to the nursing home with interest.

Recent Developments

CMS recently issued guidance to state survey agencies revising its policy surrounding the imposition of CMPs. CMS’ stated goal in revising its CMP guidelines is to achieve “national consistency” with respect to the assessment of CMPs. The revisions made by CMS to its CMP policies for nursing homes are summarized below:

• Instances of Non-Compliance Resolved by the Nursing Home: in cases where a nursing home is found to be non-compliant prior to a survey and the non-compliance has been fully addressed by the nursing home prior to the initiation of the survey, CMS will impose per-instance CMPs.

• Past Non-Compliance: in cases where a nursing home is found to be non-compliant prior to the initiation of and during a survey, CMS will generally impose per instance CMPs on a retroactive basis. Per day CMPs will be considered in cases where a resident suffers serious harm that constitutes immediate jeopardy; a resident is abused; or the nursing home has a history of persistent non-compliance.

• Existing Non-Compliance: in cases where a nursing home is found to be non-compliant during a survey and the non-compliance endures after the survey is completed, CMS will generally impose per day CMPs. CMS may consider per instance CMPs in these circumstances where the nursing home has a history of compliance or where a resident is harmed in an isolated incident that was not caused by abuse.

In addition to these policy changes, CMS has revised the User’s Guide for its “CMP Analytic Tool.” This tool contains the step-by-step process CMS follows when calculating and imposing CMPs.

CMS has issued further guidance discouraging the imposition of CMPs in cases where the nursing home’s non-compliance is found to constitute a “one-time mistake” instead of a pattern.

Conclusion

This change in CMS’ enforcement strategy is likely to be welcome news to nursing homes beleaguered by government-imposed fines. In the event that a nursing home is found to be non-compliant with Federal or state requirements, it should contact qualified legal counsel immediately.  

Adam Bird is a partner in the healthcare practice group at Calhoun Bhella & Sechrest LLP. Please contact him at (202) 804-6031 or abird@cbsattorneys.com to set up a free consultation.