CMS Tool for Assessing Civil Money Penalties Imposed Against Nursing Facilities Continues to Ensure that Penalties Will Remain Low
Civil Money Penalties for nursing facilities have historically been too low to provide meaningful incentive for most facilities to comply with federal standards of care implemented to ensure patient safety and well-being. The new Civil Money Penalty Analytic Tool from the Centers for Medicare & Medicaid Services (CMS) does not solve this problem.
Every state has a State Survey Agency (often located in the State health department) that, among other functions, is responsible for conducting annual and complaint surveys at nursing facilities that provide care to Medicare and Medicaid beneficiaries. The surveys are intended to assure that certified facilities are in substantial compliance with federal standards of care. For facilities that participate in the Medicare program (and nationwide, most facilities do), CMS’ Regional Offices (ROs) have authority to impose civil money penalties (CMPs) against facilities that are found to be violating federal certification requirements, based on recommendations of the state survey agencies.
Federal regulations identify violations of federal requirements as “deficiencies.” They categorize deficiencies by their scope (number of residents affected) and severity (seriousness of actual or potential harm to residents), using a 12-box enforcement grid, with letter “A” representing the least severe isolated deficiencies and letter “J” representing the most severe widespread deficiencies. Since the Nursing Home Reform Law was enacted in 1987 and the enforcement system was implemented by regulation in 1993, the regulations have authorized per day CMPs in two categories: $50 to $3,000 per day for non-jeopardy deficiencies (boxes D-I) and $3,050 to $10,000 per day for immediate jeopardy deficiencies (boxes J-L). The amounts of the CMPs have not been increased since 1987. Per instance CMPs, added by regulations in 1999, range from $1,000 to $10,000, regardless of the scope and severity of the deficiencies.
CMS developed standards for ROs to use in setting amounts of CMPs. It issued a Civil Money Penalty Analytic Tool in March 22, 2013 and posted the Tool, as a publicly available Survey and Certification Letter to State Survey Agencies, on December 19, 2014.
Although there are many good aspects to the Tool and CMS’s guidance on setting CMPs, the Tool and Guidance set low CMPs and generally assure that CMPs will continue to remain low.
The Good (Aspects of the CMP Analytic Tool that Strengthen and Enhance Enforcement)
- The tool and CMS guidance are publicly available. Although CMS had developed a tool by at least 2007, it had not posted the tool on a public website before.
- CMS clarifies that per day CMPs are preferred and should always be used “if none of the [per instance] PI factors is present.” User’s Guide. 3.2 Per instance CMPs should be used only when one or more of the following factors are present:
- Finding of noncompliance that is a singular event of actual harm at a [Scope/Severity] S/S at “G” or “J”
- Findings of current/ongoing noncompliance at a S/S of “G” or above, or [substandard quality of care] SQC findings at “F” but where a facility has a good compliance history
- Findings of past noncompliance when dates of noncompliance cannot be determined at a S/S of “G” or above or SQC findings at a S/S of “F”. [underlining and italics in original]
User’s Guide 3.2.
- CMS clarifies that per day CMPs should “generally [be] used when the noncompliance lasts for two or more days.” User’s Guide 3.2.
- CMS clarifies that the start date of a per day CMP should be the “the first day noncompliance at the cited S/S level is documented, even if that date precedes the first day of the current survey unless the facility can demonstrate that it corrected the noncompliance prior to the current survey (past noncompliance).” User’s Guide 3.3. CMS directs ROs to use “the first supportable date of noncompliance.” Id. 3.4. If that date cannot be determined, the start day should be “the date the noncompliance was observed and documented at the time of the current survey.” Id. 3.3. ROs must contact the state survey agency to ask if the first date of noncompliance can be determined and “should document this discussion and conclusion.” Id.
The Bad (Aspects of the CMP Analytic Tool that Weaken Enforcement)
- CMS directs Regional Offices to consider remedies other than CMPs when the deficiencies are at a scope and severity below G, unless substandard quality of care is also cited at level F. User’s Guide 3.1. Since more than 95% of deficiencies are cited below Level G and that percentage increased between 2008 and 2012, CMS’s guidance essentially directs ROs not to use CMPs at all for most instances of facility noncompliance.
- CMS directs ROs to “select the highest S/S level for the base Calculated CMP Amount.” User’s Guide 2.6.1.
Per Day CMPs
|Immediate Jeopardy||J $3050||K $4050||L $5050|
|Actual Harm||G $250||H $600||I $1000|
|Potential for More than Minimal Harm||D $100||E $150||F $200|
|No Harm (Substantial Compliance)||NA||NA||NA|
Per Instance CMPs
|Immediate Jeopardy||J $3500||K $4500||L $5500|
|Actual Harm||G $1500||H $2000||I $2500|
|Potential for More than Minimal Harm||D Nothing listed||E Nothing listed||F $1200|
|No Harm (Substantial Compliance)||NA||NA||NA|
User’s Guide 2.6.2. These amounts are identical to the amounts that CMS put in the Analytic Tool in June 2007, except that in June 2007, CMS also identified amounts for per instance CMPs at S/S D ($1000) and E ($1100).
- CMS authorizes ROs to adjust CMPs upwards, reflecting a variety of factors, but, as demonstrated below, these factors, as defined, will only rarely result in significant upward adjustments:
- History of facility noncompliance (42 C.F.R. §488.438(f)(1)), but only for prior deficiencies in the past three calendar years. If applicable, CMS directs ROs to add an amount between $100 and $500. User’s Guide 2.7.
- Factors determining “a good compliance history” include the following:
- “The facility is not a Special Focus Facility;”
- “The facility has not had findings at a S/S of “G” or above within the past three (3) calendar years, unless they were cited as past noncompliance;”
- “The facility has a history/pattern of achieving compliance prior to or at the time of the first revisit; and/or”
- “The facility has a history/pattern of sustaining compliance with previously cited deficiencies (i.e., no repeat deficiencies).”
- Factors determining “a good compliance history” include the following:
User’s Guide 3.2. These factors define “good compliance history” so broadly that most facilities will be determined to have a “good compliance history” and, consequently, upward adjustments of CMPs for facility history of noncompliance will be rare.
- Repeated deficiencies (42 C.F.R. §488.438(d)(2)(3)), but only for deficiencies in the same “regulatory grouping of requirements.” If applicable, CMS directs the following upward adjustments of CMPs:
- Level F: $50
- Levels G, H, I: $100
- Levels J, K, L: $150
User’s Guide 2.8. “Regulatory grouping of requirements” refers to 13 broad categories like quality of care and quality of life. However, since deficiencies can often be cited under a variety of regulatory standards, upward adjustments of CMPs for repeated deficiencies may be avoided if deficiencies are cited under a different category.
- Substandard quality of care (42 C.F.R. §488 .438(d)(2)(3)). If applicable, CMS directs the upward adjustments of per day CMPs ranging from $50 per day (Level F) to $500 (Level J, K, L), and of per instance CMPs ranging from $500 (Level F) to $2500 (Level J, K, L). The low scope and severity levels of most deficiencies mean that few CMPs will have significant upward adjustments.
- Total number of deficiencies (42 C.F.R. §488.438(d)(2)(3)). If applicable, CMS directs the upward adjustments of per day CMPs based on the total number of deficiencies cited.
- For 1-6 deficiencies, the range is $0 (Level F, at SQC) to $400 (jeopardy);
- For 7-10 deficiencies, the range is $0 (Level F, at SQC) to $450 (jeopardy);
- For 11-19 deficiencies, the range is $0 (Level F, at SQC) to $500 (jeopardy);
- For 20+ deficiencies, the range is $50 (Level F at SQC) to $550 (jeopardy).
User’s Guide 2.10. Since the mean number of deficiencies declined to 5.9 per survey in 2012, significant upward adjustments for total number of deficiencies will also be rare.
- Facility culpability (42 C.F.R. §488.438(f)(4)). If applicable, CMS directs the following upward adjustments of CMPs:
- Level F at SQC: $100-$250
- Level G, H, I: $300-$1000
- Level J, K, L: $1250-$2250
User’s Guide 2.11. The Guide ends with examples of decisions of the Departmental Appeals Board (Appellate Division) that found facility culpability. Id. 3.7.
- CMS requires ROs to reduce the calculated CMP if it exceeds “the maximum regulatory amount” – per day CMP, $10,000 for immediate jeopardy; per day CMP, $3000 for non-immediate jeopardy; per instance CMP, $10,000. User’s Guide 2.12.
- Facility financial condition (42 C.F.R. §488.438(f)(2)). The RO must determine that documentation provided by the facility proves either “The facility lacks sufficient assets to pay the CMP without having to go out of business” or “The facility does not lack sufficient assets to pay the CMP without having to go out of business.” User’s Guide 2.13.
CMS does not explain when or how the facility would provide CMS with documentation about its financial status. What process does CMS envision? Under prior practice, the public would know what CMP had been imposed and by how much the amount was reduced. Under the new Guide, it appears that only the reduced CMP will be publicly disclosed.
CMS describes the tool and CMS guidance as intended “to promote more consistent application of enforcement remedies” for skilled nursing facilities, nursing facilities, and dually-certified facilities. Survey & Certification Letter. It reports that use of the tool “will help shape the language of future proposed guidance related to CMPs and other enforcement remedies.” And while CMS directs ROs to use the tool in calculating CMPs, it also says,
This tool is not intended to yield an automatic, immutable end result in the calculation of a CMP. It does not replace professional judgment or the application of other pertinent information in arriving at a final CMP amount. However, it does provide logic, structure, and defined factors for mandatory consideration in the determination of CMPs. The tool should be used with the CMP Analytic Tool User’s Guide, which more fully explains factors and policies that lead to final CMP amounts.
The Bottom Line
The Government Accountability Office (GAO) has repeatedly reported over the past two decades that deficiencies are often cited as less serious than they actually are and that the federal enforcement system is overly permissive and tolerant of poor care. CMPs are too small to influence facility behavior and improve the quality of care and quality of life of residents. Unfortunately, the CMS tool and guidance will ensure that CMPs continue to remain low.
January, 2015 – T Edelman
 42 U.S.C. §§1395i-3(a)-(h), 1396r(a)-(h), Medicare and Medicaid, respectively.
 42 C.F.R. §§488 .400-.456.
 42 C.F.R. §488.438(a)(2), 64 Fed. Reg. 13354 (Mar. 18, 1999) (final rule with comment period).
 CMS, “Civil Money Penalty (CMP) Analytic Tool and Submission of CMP Tool Cases,” S&C: 15-16-NH (Dec. 19, 2014) (Memorandum from Thomas E. Hamilton, Director, Survey and Certification Group, to State Survey Agency Directors), http://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/SurveyCertificationGenInfo/Downloads/Survey-and-Cert-Letter-15-16.pdf
 CMS, “Civil Money Penalty (CMP) Analytic Tool,” Admin Info: 07-14 (Jun. 22, 2007) (Memorandum from Thomas E. Hamilton, Director, Survey and Certification Group, to State Survey Agency Directors). See Center for Medicare Advocacy, “The New CMS Tool for Assessing Nursing Facility Penalties Assures They Will Remain Low” (Weekly Alert, Feb. 21, 2008).
 Substandard quality of care is defined as “one or more deficiencies related to participation requirements under §483.13, Resident behavior and facility practices, §483.15, Quality of life, or §483.25, Quality of care of this chapter, which constitute either immediate jeopardy to resident health or safety; a pattern of or widespread actual harm that is not immediate jeopardy; or a widespread potential for more than minimal harm, but less than immediate jeopardy, with no actual harm.” 42 C.F.R. §488.301.
 CMS, Nursing Home Data Compendium, 2013 [hereafter Nursing Home Data Compendium], Figure 2.2.e, Percentage Distribution of Scope and Severity Health Deficiency Citations, 2012, page 48 (finding 90.5% of deficiencies were cited at levels D-F (no harm) and 6.3% of deficiencies were cited at A-C (substantial compliance), http://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/CertificationandComplianc/downloads/nursinghomedatacompendium_508.pdf.
 Between 2008 and 2012, deficiencies at levels D-F increased by 5.3%. Deficiencies at all other levels declined (level J-L, immediate jeopardy, declined by 14.5%; level G-I, actual harm, declined by 53.7%; level A-C, substantial compliance, declined by 54.6%). Figure 2.2.f, Percent Change in Distribution of Scope and Severity Health Deficiency Citations, 2008-2012, page 49, Nursing Home Data Compendium, supra note 7.
 42 C.F.R. §§483.10-.75.
 See note 7, supra.
 Figure 2.3, Mean Number of Health Deficiencies Cited in Nursing Home Surveys by Year, 2003-2012, page 50, Nursing Home Data Compendium, supra note 7.
 GAO, Some Improvement Seen in Understatement of Serious Deficiencies, but Implications for the Longer-Term Trend Are Unclear, GAO-10-434R (Apr. 28, 2010), http://www.gao.gov/assets/100/96704.pdf; GAO, Addressing the Factors Underlying Understatement of Serious Care Problems Requires Sustained CMS and State Commitment, GAO-10-70 (Nov. 24, 2009), http://www.gao.gov/assets/300/298953.pdf; GAO, Federal Monitoring Surveys Demonstrate Continued Understatement of Serious Care Problems and CMS Oversight Weaknesses, GAO-08-517 (May 9, 2008), http://www.gao.gov/assets/280/275154.pdf; GAO, Stronger Complaint and Enforcement Practices Needed to Better Ensure Adequate Care, T-HEHS-99-89 (Mar. 22, 1999), http://www.gao.gov/assets/110/107832.pdf ; GAO, Additional Steps Needed to Strengthen Enforcement of Federal Quality Standards, HEHS-99-46 (Mar. 18, 1999), http://www.gao.gov/assets/230/227015.pdf.