CMS Issues Final Rule on Civil Money Penalties for Nursing Homes

On March 18, 2011, the Centers for Medicare and Medicaid Services (“CMS”) issued new federal regulations implementing Section 6111 of the Patient Protection and Affordable Care Act and changing the way the federal government imposes and collects civil money penalties (“CMPs”) when nursing homes do not meet Medicare and Medicaid participation requirements.  The Final Rule takes effect January 1, 2012.

The Final Rule (available here):

  1. creates a process for the payment of CMPs into an escrow account before the completion of an administrative appeal;
  2. establishes an “independent” informal dispute resolution process for cases where CMS imposes a CMP subject to escrow;
  3. allows for a 50% reduction in CMPs when the facility self-reports and promptly corrects noncompliance; and
  4. provides guidelines for the acceptable uses of CMPs collected from Medicare facilities to benefit nursing home residents.

Beginning next year, CMS will phase in the new collection and escrow provisions with an initial focus on the most serious deficiencies.  The right to independent IDR will apply when CMS gives notice that it will collect the CMP and place it into escrow pending the resolution of an administrative appeal.  If the nursing home wins the appeal, CMS will return the escrowed funds with interest.  The 50% reduction in CMPs for prompt reporting and correction will not apply to immediate jeopardy deficiencies or those constituting a pattern of harm or widespread harm or resulting in resident death, or for a repeated deficiency that was the basis of a previous CMP reduction.  A portion of the CMP attributable to Medicare may be used for the benefit of nursing home residents.

CMS intends to issue additional guidance in the State Operations Manual regarding the collection and escrow provisions, to clarify the interplay between the existing IDR and the new independent IDR processes, and to provide more specific information on the acceptable uses of CMPs.

We will post additional information as it becomes available.

This post was contributed by Jane Bello Burke and Aaron Mensh.