June 13, 2017

CMS Reverses its Ban on Arbitration Agreements in Nursing Homes

Client Alert
Jeff Smith

The Centers for Medicare & Medicaid Services’ (CMS) completely reversed its Obama-era view of nursing home arbitration agreements. The reversal hardly came as a surprise, as the agency has been signaling a new approach in recent communications. More here.

But the agency’s official change in position began on June 2, 2017, when without any explanation, CMS abandoned its Fifth Circuit appeal of a decision that blocked the previous ban on mandatory arbitration agreements, detailed here. (Technically, the case is still pending, but dismissal appears imminent.)

Then, on June 5, 2017, CMS announced revisions to the long-term care requirements for Medicare and Medicaid participation. The CMS rule revisions now permit arbitration agreements in long-term care contracts, but only under certain conditions, such as:

  • Plain Language: The arbitration agreements must be written plainly, so residents and their representatives can understand them.
  • Acknowledgement: Residents must acknowledge that they understand the arbitration agreement.
  • Condition of Admission: The language of a condition of admission must be written plainly and be included in the contract for admission.
  • Prohibition: Arbitration agreements must not prohibit or discourage residents or their representatives from communicating with government officials, surveyors, or ombudsman.
  • Inspection: Long-term care facilities must keep a copy of the executed arbitration agreement and any final decisions from an arbitrator for inspection by CMS.
  • Notice: Long-term care facilities must post notice of their use of binding arbitration in prominent areas so it can be easily seen by residents and visitors.

The revised requirements have been published in the Federal Register here and comments are due by August 7, 2017. These changes will drastically impact contract formation and the litigation landscape in the nursing home setting. When finalized, nursing home facilities will need to make significant changes to contractual language and procedures to stay compliant with the changing regulations.

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