Dana Petrillo

The Centers for Medicare & Medicaid Services Final Rule, released July 18, revised arbitration agreements for long-term care facilities.

The new rule amends the requirements of a 2016 rule titled “Reform of Requirements for Long-Term Care Facilities.” The 2016 rule prohibited LTC facilities from entering into pre-dispute binding arbitration agreements with any resident or from requiring residents to sign an arbitration agreement as a condition of admission to the LTC facility. 

Advocates of the 2016 rule argued that it was an important step towards protecting vulnerable nursing home residents who may not understand the implications of signing binding pre-dispute arbitration agreements. Many providers disagreed, arguing it created too much burden on LTC providers who were already struggling under onerous regulatory requirements that strained their available resources. 

The 2019 Final Rule appears to be a compromise between proponents of the 2016 rule (who did not want it modified whatsoever) and the opponents who wanted it rescinded completely. The 2019 Final Rule repeals the prohibition on the use of pre-dispute binding arbitration agreements, while strengthening the transparency of arbitration agreements. 

The new rule includes provisions that “establish substantial protections for residents and their representatives and ensure transparency in the arbitration process” and “protects residents’ rights to make informed choices about their healthcare by ensuring that residents or their representatives have the right to understand what the arbitration agreement says and the consequences of signing the agreement.”

2019 Final Rule Revisions to Arbitration Requirements

Under the 2019 Final Rule, a LTC facility must comply with the following criteria: 

  • Not require a resident or his or her representative sign an agreement for binding arbitration as a condition of admission to, or as a requirement to continue to receive care at the facility. 
  • Ensure that the agreement is explained to the resident or his or her representative in a form, manner and language that he or she understands. The resident or his or her representative must acknowledge that he or she understands the agreement.
  • Ensure that the agreement provides for the selection of a neutral arbitrator agreed upon by both parties and a venue that is convenient to both parties. 
  • Ensure that the agreement does not contain any language that prohibits or discourages the resident or anyone else from communicating with federal, state or local officials. 
  • Retain copies of the signed agreement for binding arbitration and the arbitrator’s final decision for five years after the resolution of any dispute resolved through arbitration with residents. These documents must be available for inspection upon request by CMS or its designee.  
  • Grant residents a 30 calendar day period during which they may rescind their agreement to arbitrate.

What this means for SNFs

The 2019 Final Rule becomes effective on September 16, 2019. This means that any valid arbitration agreements that have already been signed by current LTC residents will remain valid, although CMS encourages “LTC facilities to offer current residents who have signed arbitration agreements the opportunity to rescind those agreements and proceed with a new agreement that conforms to these regulations.” 

To be compliant with the 2019 Final Rule, all LTC providers should consider the following next-steps:

  • Amend any pre-dispute arbitration agreement templates as necessary to comply with the 2019 Final Rule. 
  • Update record-retention policies and procedures to ensure that arbitration agreements and final decisions are maintained in accordance with the 2019 Final Rule.
  • Update policies and procedures to ensure that prospective residents are informed of the nature and existence of pre-dispute arbitration agreements as required by the 2019 Final Rule.
  • Provide training to relevant employees regarding all updated policies and procedures.

Dana Petrillo is counsel at White and Williams.