CMA Alert – SNF Update: Comments on Reimbursement; Civil Money Penalties Weakened
Center for Medicare Advocacy Submits Comments on CMS’s Proposed Redesign of Medicare Reimbursement for Skilled Nursing Facilities
In an Advance Notice of Proposed Rulemaking, the Centers for Medicare & Medicaid Services (CMS) described a new Medicare reimbursement system for skilled nursing facilities (SNFs), Resident Classification System – I, that would replace the prospective payment system that has been in place for nearly 20 years. CMS extended the comment period to August 25, 2017.
The Center for Medicare Advocacy strongly opposes the proposed system, which dramatically alters the Medicare benefit, encourages less (or no) therapy and shorter Medicare-covered stays, ignores the mandate of Jimmo to cover maintenance therapy, encourages provider gaming and fraud, and does not improve nurse staffing levels. The proposal neither addresses problems that have been identified in the reimbursement system over the years (except for its over-correction of therapy overpayments), nor meets CMS’s goals of more accurately compensating SNFs, reducing incentives to provide therapy for financial reasons, and maintaining simplicity.
The Center’s comments, which we have submitted to CMS, are available at http://www.medicareadvocacy.org/center-comments-on-proposed-redesign-of-reimbursement-for-skilled-nursing-facilities/.
 82 Fed. Reg. 20980 (May 4, 2017), https://www.gpo.gov/fdsys/pkg/FR-2017-05-04/pdf/2017-08519.pdf. The ANPRM is discussed in CMA, “CMS Considers New Medicare Reimbursement System for Skilled Nursing Facilities: If Implemented, Would Gut Therapy” (CMA Alert, May 17, 2017), http://www.medicareadvocacy.org/cma-alert-may-17-2017.
As Sought By Nursing Home Industry, CMS Changes Guidance to Reduce Civil Money Penalties for Nursing Facility Deficiencies
Although civil money penalties (CMPs) imposed against nursing facilities that are cited with deficiencies in federal standards of care are infrequent and low in amount, the Centers for Medicare & Medicaid Services (CMS) has issued guidance to make them even less frequent and lower in the future. Guidance to state survey agencies published July 7, 2017 includes a new CMP Analytic Tool that Regional Offices (ROs) must use in determining whether to impose per day or per instance CMPs. Replacing guidance and the Analytic Tool that were issued March 22, 2013 and posted on CMS’s website on December 19, 2014, CMS reversed its former policy and now directs ROs to impose lower per instance CMPs, rather than generally higher per day CMPs, in the majority of situations where a facility is cited for noncompliance. Other changes in the Tool, discussed below, also have the effect of reducing CMPs. As guidance below the level of regulations, changes made by the Survey & Certification Letter (S&C Letter) were issued without public notice or opportunity to comment.
As discussed below, CMS describes lower per instance CMPs now as the default in instances of past noncompliance and noncompliance that began before the survey and continues during the survey. In addition, although the S&C Letter describes per day CMPs as the default for noncompliance that is identified only during a survey, the “exceptions” – facilities with good compliance histories and deficiencies affecting “a single isolated incident causing harm to a resident” – may swallow the rule and make per instance CMPs the norm, even when deficiencies are found to exist during the survey. Complaint surveys, which frequently cite the most serious deficiencies and lead to the largest CMPs, are now limited to per instance CMPs, since they generally account for harm to a single individual.
The new guidance reflects recommendations from the nursing home industry. In a March 2017 letter to HHS Secretary Thomas E. Price, the American Health Care Association (AHCA) describes CMPs as being used as “punishment,” instead of as incentives to correct problems, and asks the Secretary to replace guidance about CMPs that was issued in July 29, 2016 and to prohibit the imposition of retroactive CMPs. CMS has begun to make these changes (and others) sought by the trade association.
Every state has a State Survey Agency (usually located in the State health department) that, among other functions, is responsible for conducting annual surveys and investigations of complaints at nursing facilities that provide care to Medicare and Medicaid beneficiaries. The surveys determine whether 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 have authority to impose CMPs and other remedies 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 enactment of the Nursing Home Reform Law in 1987 and implementation of the enforcement regulations in 1993, the federal 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). Per instance CMPs, added by regulations in 1999, ranged from $1,000 to $10,000, regardless of the scope and severity of the deficiencies.
A little-noticed provision of the Bipartisan Budget Act of 2015, Pub.L. 114-74 (signed by President Obama on November 2, 2015), amended the Federal Civil Penalties Inflation Adjustment Act of 1990 to eliminate the exemption from adjustments for inflation for all programs under the Social Security Act (including Medicare and Medicaid). For the first time since 1987, the amounts of the CMPs that could be imposed against nursing facilities were increased.
In September 2016, CMS published updated CMPs. Final rules published February 3, 2017 include the annual inflation adjustment for civil money penalties assessed on or after February 3, 2017. All nursing home CMPs more than doubled so that a $10,000 CMP, for example, is now $20,965.
2017 CMP Analytic Tool
The most significant change in the 2017 Analytic Tool that CMS issued on July 7 is its direction to make per instance CMPs, rather than per day CMPs, the default CMP:
- Whenever there is past noncompliance (“when a facility was out of substantial compliance before the current survey began, but took specific action to fully address the issue and came back into compliance with a specific regulatory tag”);
- Whenever noncompliance that began before a survey continues to exist at the time of the survey unless “(1) a resident suffers actual serious harm at the immediate jeopardy level; (2) a resident was abused; (3) or the facility had persistent deficient practices violating federal regulations;” and
- Whenever noncompliance is found during the survey but the facility had a good compliance history and the survey identifies “a single isolated incident causes harm to a resident, unless abuse has been cited.” Although the S&C Letter describes per day CMPs as the default for noncompliance that is found to exist during the survey, the “exceptions” – facilities with good compliance histories and deficiencies affecting “a single isolated incident causing harm to a resident” – are likely to make per instance CMPs the norm.
Moreover, even when per day CMPs are used, the 2017 CMP Analytic Tool discourages ROs from starting per day CMPs before “the start date of the survey” unless the deficiencies are very serious. This direction is inconsistent with and undermines regulatory language that authorizes CMS to impose per day CMPs on the first day that noncompliance is identified (even if that date is before the survey began) and “to impose a [CMP] for the number of days of past noncompliance, including the number of days of immediate jeopardy.”
These changes essentially implement the nursing home industry’s request to eliminate so-called “retroactive” CMPs – CMPs reflecting noncompliance at times when surveyors are not present in a facility conducting a survey.
In contrast to the 2017 CMP Analytic Tool, the 2014 CMP Analytic Tool said that per day CMPs were “generally used when the noncompliance lasts for two or more days.” It also directed ROs to impose per day CMPs as the default unless one or more specific per instance CMP factors were present. These factors were: (1) “finding of noncompliance that is a singular event of actual harm” at a scope/severity level of “G” or “J;” (2) findings of current/ongoing noncompliance a “G” or above or substandard quality of care at “F” but the facility has a “good compliance history;” or (3) dates of past noncompliance cannot be determined at “G” or above of SQC findings of “F.”
A case example illustrates the significance of CMS’s new directions to ROs. In St. Andrews Place v. CMS, a complaint survey, conducted April 16, 2014, into a resident’s flight from the facility on April 9, 2014, resulted in an immediate jeopardy deficiency for supervision, 42 C.F.R. §483.25(h), and the imposition of per day CMPs – $6200, April 9-15, 2014; $150, April 16-29, 2014 – totaling $45,500. (The CMP pre-dated the inflation-based adjustments made in 2016; the CMP would have been doubled to more than $90,000 under the inflation-adjusted CMP amounts.) The Administrative Law Judge (ALJ) upheld the deficiency and the CMP. Under the 2017 CMP Analytic Tool, a per instance CMP would be required instead, if the facility had a “good compliance history,” because the incident involved a single resident and was not abuse. The maximum permissible CMP would be $20,965.
The 2017 CMP Analytic Tool makes additional changes that will have the effect of reducing the amounts of all CMPs that are imposed against facilities. The 2017 CMP Analytic Tool:
- Distinguishes whether any resident suffered actual harm, in calculating the CMPs for immediate jeopardy deficiencies. Neither the 2014 CMP Analytic Tool nor the federal regulations make this distinction. Actual harm is not required for immediate jeopardy deficiencies, and ALJs sustain jeopardy-level deficiencies even when residents have not suffered actual harm.
- Does not include any guidance of multiple jeopardy-level deficiencies, as the 2014 CMP Analytic Tool did. The omission suggests that CMS will limit the number of jeopardy-level deficiencies that can be cited for a single incident. At present, multiple deficiencies may be cited for a single incident and the State Operations Manual (where surveyor guidance appears) explicitly identifies other deficiencies that should be considered for citing when one deficiency is cited.
- Requires that “any CMP of $250K must be sent to CMS Central Office for review prior to sending the imposition letter.” At present, there is no Central Office review of low CMPs or, for that matter, of surveys that do not cite any deficiencies at all.
- Authorizes adjustments in the CMP based on “The amount of time between the noncompliance and the survey” and “The amount of time for the revisit survey if it exceeded the amount of time required by the SOM.” There is no comparable statement in the 2014 guidance or analytic tool.
- Authorizes consideration of “financial factors” that facilities submit to justify reduction in the CMP. The 2014 CMP Analytic Tool considered only whether “The facility lacks sufficient assets to pay the CMP without having to go out of business.”
CMS has begun the process of weakening and dismantling the nursing home enforcement system. To protect residents, advocates must remain vigilant and vocal in opposition to these setbacks.
 CMS, “Revision of Civil Money Penalty (CMP) Policies and CMP Analytic Tool,” S&C: 17-37-NH (Jul. 7, 2017), (Memorandum from David R. Wright, Director, Survey and Certification Group, to State Survey Agency Directors), https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/SurveyCertificationGenInfo/Downloads/Survey-and-Cert-Letter-17-37.pdf.
 CMS, 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. The 2014 CMP Analytic Tool is discussed in CMA, “CMS Tool for Assessing Civil Money Penalties Imposed Against Nursing Facilities Continues to Ensure that Penalties Will Remain Low,” (CMA Alert, Jan. 29, 2015), http://www.medicareadvocacy.org/cms-tool-for-assessing-civil-money-penalties-imposed-against-nursing-facilities-continues-to-ensure-that-penalties-will-remain-low/.
 S&C: 16-31-NH (Rev. Jul. 29, 2016), https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/SurveyCertificationGenInfo/Downloads/Survey-and-Cert-Letter-16-31.pdf.
 The letter is available on the website of the Illinois Health Care Association, at http://www.ihca.com/Files/Comm-Pub/AHCA-Final-Price-Ltr-3.9.17.pdf.
 AHCA asked for CMS to modify or eliminate some of the new Requirements of Participation that were published in October 2016, 81 Fed. Reg. 68688 (Oct. 4, 2016). CMS accommodated this request and delayed enforcement of many new Requirements that were due for implementation in October 2017. CMS, “Revision to State Operations Manual (SOM) Appendix PP for Phase 2, F-Tag Revisions, and Related Issues,” S&C: 17-36-NH (Jun. 30, 2017), https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/SurveyCertificationGenInfo/Downloads/Survey-and-Cert-Letter-17-36.pdf.
CMS also abandoned its appeal of the injunction against mandatory pre-dispute arbitration agreements in admissions agreements.
 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).
 https://www.congress.gov/114/plaws/publ74/PLAW-114publ74.pdf. See Center for Medicare Advocacy, “Budget Act of 2015 Increases Penalties for Programs under the Social Security Act, Including Nursing Facilities” (CMA Alert, Nov. 18, 2015), http://www.medicareadvocacy.org/budget-act-of-2015-increases-penalties-for-programs-under-the-social-security-act-including-nursing-facilities/.
 CMS, “Adjustment of Civil Monetary Penalties for Inflation,” 81 Fed. Reg. 61537 (Sep. 6, 2016).
 82 Fed. Reg. 9174 (Feb. 3, 2017), https://www.gpo.gov/fdsys/pkg/FR-2017-02-03/pdf/2017-02300.pdf.
 S&C: 17-37-NH, 2017 CMP Analytic Tool, page 5, §22.214.171.124.
 S&C: 17-37-NH. The 2017 CMP Analytic Tool provides more detail: (1) the noncompliance is “a singular event of actual harm” at “G” or “J,” or (2) findings of current/ongoing noncompliance at “G” or above or substandard quality of care at “F” but the facility has a good compliance history. 2017 CMP Analytic Tool, page 7, §126.96.36.199.
 Good compliance history is broadly defined in the 2017 and 2014 Tools as (1) not being a Special Focus Facility; (2) not having deficiencies at “G” or above in the prior three calendar years, “unless they were cited as past noncompliance;” (3) having a history of achieving compliance at the first revisit; and (4) no repeat deficiencies.
 S&C: 17-37-NH.
 2017 CMP Analytic Tool, page 22, §3.3, does not authorize CMPs to begin before the survey unless (1) there was immediate jeopardy, with harm to a resident; (2) abuse at harm or jeopardy was cited, with actual harm to a resident; (3) the same “G” or above deficiency was cited within the last year and is cited at jeopardy level on the current survey; or (4) deficiencies at “H” or “I” were cited.
 42 C.F.R. §488.440(a)(1).
 42 C.F.R. §488.430(b).
 S&C: 15-16-NH, p. 21, §3.2.
 S&C: 15-16-NH, page 5, §2.4.2. These factors are: (1) “finding of noncompliance that is a singular even of actual harm” at a scope/severity level of “G” or “J;” (2) findings of current/ongoing noncompliance a “G” or above or substandard quality of care at “F” but the facility has a “good compliance history” (defined in 2014 and 2017 as not being a Special Focus Facility; not having a “G” or higher deficiency in the prior three years; facility has a pattern of correcting deficiencies at the first revisit; no repeat deficiencies); or (3) dates of past noncompliance cannot be determined at “G” or above of SQC findings of “F.”
 See the definition of “good compliance history” in note 18, supra.
 Decision No. CR4544 (Mar. 10, 2016),
 2017 CMP Analytic Tool, page 9, §2.6.2.
 2017 CMP Analytic Tool, page 24, §3.6.
 2017 CMP Analytic Tool, page 16, §2.13.2.
 2017 CMP Analytic Tool, page 17, §2.14.2.