CMS Bans Arbitration Agreements in Long-Term Care

In one fell swoop, the Centers for Medicare & Medicaid Services (CMS) has squashed the controversial use of pre-dispute arbitration agreements in long-term care.

The move was announced Wednesday, when CMS issued a new final rule governing the nation’s long-term care facilities. The new rule, which marks the first comprehensive update CMS has made regarding long-term care facilities since 1991, bans the controversial practice used by long-term care facilities to settle disputes with residents and families outside of the court system.

The CMS rule applies only to Medicare- and Medicaid-certified providers; however, many assisted living providers also require prospective residents to sign arbitration agreements prior to moving in. Private-pay senior living providers also have faced scrutiny and criticism for their use of arbitration agreements, and the leader of one major provider association, Argentum, just this week warned that federal authorities could take action in this area.


The nation’s largest skilled nursing facility provider association, the American Health Care Association (AHCA), has taken a strong stance in opposition to CMS’ ban on arbitration agreements.

“AHCA is extremely disappointed that CMS included in the final rule a provision banning all pre-dispute arbitration agreements,” CEO and President Mark Parkinson stated Wednesday. “That provision clearly exceeds CMS’s statutory authority and is wholly unnecessary to protect residents’ health and safety. AHCA is considering the appropriate steps for it to take in light of this unjustified action by CMS.”

Overall, the policies laid out in the 713-page final rule on long-term care are intended to reduce unnecessary hospital readmissions, improve quality of care, enhance safety measures for residents and reduce infections in long-term care facilities, CMS Acting Administrator Andy Slavitt and CMS Center for Clinical Standards & Quality Director Kate Goodrich wrote in a post on The CMS Blog. The updates are also meant to strengthen the rights of long-term care residents and their families in the event that a conflict arises with a facility, the post says.


Specifically, effective Nov. 28, 2016, long-term care facilities’ use of pre-dispute binding arbitration agreements will be banned.

Residents and facilities will still be able to use arbitration on a voluntary basis after a conflict occurs, however, CMS says. In these cases, CMS requires that these arbitration agreements be clearly explained to residents, including the understanding that these agreements are voluntary, and that these agreements should not discourage or prevent residents and their loved ones from alerting authorities to concerns about quality of care.

The final rule, among other things, will also guarantee that long-term care facility staff members are properly trained to prevent elder abuse and care for residents with dementia; enable therapy providers and dietitians to write orders in their areas of expertise when a physician delegates the responsibility and state licensing laws permit; and update long-term care facilities’ infection prevention and control programs.

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The final rule was met with praise from the American Association for Justice, a Washington, D.C.-based group that works to preserve the constitutional right to trial by jury.

“The days of nursing homes using forced arbitration agreements to evade accountability and force residents and their families into signing away their legal rights are nearing an end,” American Association for Justice President Julie Braman Kane said in a prepared statement. “Today the Obama administration finalized regulations prohibiting pre-dispute arbitration clauses, taking a tremendous step toward protecting nursing home residents by ensuring that they can hold facilities accountable in cases of abuse or neglect.”

Written by Mary Kate Nelson

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