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October 18, 2016 Practice Points

CMS Issues Final Rule Impacting Long-Term-Care Facilities

Nursing homes may no longer require prospective nursing-home residents to agree to binding arbitration, much to the satisfaction of elder-care advocates.

By J. Nicole Martin and Dana Petrillo

The Centers for Medicare & Medicaid Services (CMS) published a final rule earlier this month announcing numerous changes to the consolidated Medicare and Medicaid requirements for participation for long-term-care (LTC) facilities (42 CFR part 483, subpart B). These changes will take effect on November 28, 2016. Much to the satisfaction of elder-care advocates, the final rule notably provides that nursing homes may no longer require prospective nursing-home residents to agree to binding arbitration. This strikes a blow at LTC facilities, which have generally used arbitration as a tool to avoid incurring the onerous costs associated with litigation.

CMS’s position in the final rule does not come as a complete surprise; CMS had expressed concern about the use of arbitration agreements in nursing homes in its proposed rule, published July 16, 2015. Although no longer permissible for LTC facilities to use as a condition of admission, according to Andy Slavitt, CMS’s acting administrator, and Kate Goodrich, director of the Center for Clinical Standards & Quality, “facilities and residents will still be able to use arbitration on a voluntary basis at the time a dispute arises.” However, such agreements will still need to be “clearly explained” to residents.

Nursing homes that have traditionally asked residents to sign binding arbitration agreements should revisit their admissions processes and implement revised policies and procedures to ensure compliance with the final rule, so that, beginning November 28, 2016, residents at such LTC facilities are no longer required to agree to binding arbitration. LTC facilities may also consider revising their policies and procedures to incorporate recommending the use of arbitration to residents following disputes that may arise, and to ensure that any such recommendations are clearly explained to their residents.


J. Nicole Martin and Dana Petrillo are associates with Cozen O’Connor in Philadelphia, Pennsylvania.

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