Federal Regulations for Nursing Homes

Section 6111 of the Health Care Reform Law, the Patient Protection and Affordable Care Act (PPACA), formed the basis for the establishment of a new Independent Informal Dispute Resolution (IIDR) process within the Civil Money Penalty scheme. Per Federal Nursing Home Regulations at 42 CFR 488.431, the new IIDR process has specific time lines and requirements for facilities to meet in order to take advantage IIDR. On October 14, 2011, CMS issued Survey & Certification Memorandum 12-02-NH that provides further guidance on the new IIDR process.

The new IIDR process is an option for facilities to elect if the facility is the subject of a Civil Money Penalty (CMP) that will be collected and placed in an escrow account. CMS is phasing in the CMS collection and escrow provisions of the PPACA and attendant regulations and will only be applying the CMP collection and escrow authority on the most serious deficiencies. Until further notice from CMS only those deficiencies that cite actual harm or immediate jeopardy (G or above) will be subject to the CMP collection and escrow and only those deficiencies will trigger the opportunity for IIDR. Any CMPs imposed for D, E and F deficiencies will be collected under the current process and are not subject to the new IIDR process.

Federal funding is available to States, through the State Survey Agency, for development of the IIDR process. The Indiana State Department of Health (ISDH) recently issued an alert indicating that the department is in the process of developing a new IIDR process according to the CMS guidance. The new IIDR process must:

1.       Offer a facility the opportunity for IIDR within 30 calendar days of notice of imposition of CMP that will be collected and placed into escrow. A facility has 10 calendar days to request IIDR after receiving notice.

2.       Be completed within 60 calendar days of receipt of the facility request for IIDR. “Completed” IIDR means that (a) a final decision has been rendered, (b) a written report has been generated, and (c) the ISDH has provided written notice to the facility of the decision.

3.       Generate a written record of the decision before the CMP is collected. Such written record must include (a) each disputed deficiency/survey finding, (b) a summary of the IIDR recommendation with rationale for the result, (c) documents submitted by the facility, and (d) comments submitted to the IIDR by the Ombudsman and/or residents and their representatives.

4.       Notify the Ombudsman, resident and resident’s representative of the opportunity to submit comments to the IIDR entity prior to the completion of the IIDR process.

5.       Be administered by an entity that does not have a conflict of interest with the ISDH (State Survey Agency) and that has specific understanding of Medicare and Medicaid program requirements.

CMS indicates that for States to receive Federal funds for IIDR in FY 2012, States must have a process and estimated budget submitted to CMS by November 30, 2011. Furthermore, the new IIDR process is set to begin on January 1, 2012. It is unclear at this time whether the ISDH will meet either deadline. Given that Indiana law regarding state agencies contracting for services requires a fairly lengthy procurement process, it does not seem likely that the ISDH process will be finalized and ready by January 1, 2012. For deficiencies that are subject to the new IIDR process, States may not charge facilities for the IIDR process. For situations that do not require the new IIDR (deficiencies that do not require escrowing of CMP), the State may develop and charge for its own resolution process.

Last week CMS published new federal regulations for nursing homes that will significantly change the way the government imposes and collects civil monetary penalties (“CMPs”). The regulations implement changes first mandated by Section 6111 of the health care reform law and become effective on January 1, 2012.  Some of the key provisions of the regulations include:       

• Mandatory Upfront Payment of CMPs.  Currently facilities may appeal a CMP imposition of remedies notice and need not pay the CMP until after all administrative appeals have been exhausted. Under the new regulations, facilities must pay the CMPs before the appeal is finally resolved and within certain specific deadlines.
  
  CMS will hold all CMPs in an escrow account pending the facility's appeal. If the facility wins the appeal, CMS will return the CMP to the provider with interest once the decision is final. Additionally, CMS may extend the time period for payments of the CMP into escrow if it finds immediate payment would create a “substantial and undue financial hardship on the facility.” If the facility does not timely pay the disputed CMP into escrow after receiving a demand, CMS may setoff the CMP amount from sums later due the facility.

• CMPs Reduced 50% For Self-Reporting and Correction of Deficiencies.  The new regulations also encourage facilities to self-report deficiencies by giving a 50% CMP reduction incentive if certain conditions are met. This reduction does not apply to Intermediate Jeopardy tags or non-compliance showing a pattern of harm, widespread harm to residents, or non-compliance resulting in a resident’s death. Additionally, the 50% reduction is not available for any deficiency existing in a previous survey.
  
  To qualify for the 50% reduction, the facility must:
  
  • Self-report the non-compliance to the State or CMS before it is identified by surveyors or before the government receives a complaint.
  • Correct the deficiency within a certain number of days of identifying the non-compliance or when the CMP is imposed.
  • Waive its right to a hearing regarding the deficiency and penalty. 
    
• Opportunity for Independent IDR Process.  If CMPs are assessed and are eligible for payment to the escrow fund, the facility has the opportunity to request a new “independent” IDR process. This IDR is a new alternative to the current State IDR process. CMS calls this IDR “independent” because it would be run by a separate State agency that must be approved by CMS. 

CMS implemented the Minimum Data Set 3.0 (MDS 3.0) nationally on October 1, 2010 for all participating Medicare/Medicaid certified nursing home facilities. Since that date, an issue with the CMS MDS 3.0 system has been discovered, which causes record editing and validation report creation delays. In addition, it has been reported to CMS that there have been MDS 3.0 vendor software issues that have resulted in MDS transmission issues nationally.

While CMS anticipates a resolution in the near future, the ability of facilities to comply with one of the long term care changes may be compromised. The Federal regulation at §483.20(f)(3) -F287, requires facilities to transmit MDS data within 14 days after completion. Due to the issues with the CMS system, many facilities are not able to comply with these time frames for submissions.

For the time period of October 1, 2010 through December 31, 2010, nursing home surveyors will accept the CMS system’s date stamp indicating the MDS file has been received as an indication of MDS timely transmission. A deficiency will not be issued related to the time and date stamp. Click here to view the CMS surveyor and certification letter.  If you have any questions or require additional information, please contact Lori McLaughlin at 219-227-6075 or lmclaughlin@kdlegal.com