- CMS has proposed revisions to long-term care facility requirements that would remove rules prohibiting arbitration clauses in facility agreements. The agency intends these revisions to ease provider burden, offer better transparency in the arbitration process, and support patient decision-making.
The proposal revises a final rule that CMS previously published in October 2016. In the 2016 rule, the agency prohibited arbitration clauses in long-term care facility agreements. Long-term care facilities use arbitration clauses because they require patients to settle any potential disputes outside of court by using arbitration.
CMS argued in the 2016 rule that arbitration clauses discourage patients from coming forward when they are mistreated in a long-term care facility.
However, in these proposed revisions, CMS maintained that there are both considerable pros and cons to binding arbitration in long-term care facility agreements. In comments to the 2016 final rule, many commenters offered the following praise for binding arbitration:
“Many commenters argued that arbitration was beneficial for residents and their families as well as facilities. Disputes could be resolved more quickly and with less animosity and expense than litigation. Some commenters also argued that prohibiting these agreements would only benefit lawyers, result in protracted litigation, increased costs to the facilities, and increase the burden on an already overwhelmed court system. This would also result in resources for resident care being diverted for litigation. Other commenters argued that prohibiting arbitration could be detrimental to residents.”
Since the 2016 rule’s publication, some healthcare professional organizations and nursing homes have successfully sued for an injunction on the prohibition. CMS has in response reconsidered both the pros and cons of binding arbitration and has thus issued the current proposal for revising the long-term care facility requirements.
“We have determined that further analysis is warranted before any rule takes effect,” CMS wrote in its current proposal. “We believe that a policy change regarding pre-dispute arbitration will achieve a better balance between the advantages and disadvantages of pre-dispute arbitration for residents and their providers.”
In the revisions, CMS revoked the prohibition of binding arbitration and instead calls for better transparency surrounding these agreements. The agency says that these revisions will help patients and their families make better individual decisions about their healthcare.
CMS does propose to retain some of the 2016 final rule provisions. Those provisions CMS plans to retain include explaining arbitration agreements in plain language, receiving explicit confirmation of understanding from the patient, and removal of any language that would discourage a patient from reporting mistreatment to federal, state, or local governments.
The agency also added some proposals to help protect patients presented with binding arbitration agreements.
“We propose to add a requirement that the facility must ensure that the agreement for binding arbitration is in plain language,” CMS said. “If an agreement for binding arbitration is a condition of admission, it must be in plain writing in the admission contract.”
In addition to using plain language, long-term care facilities must also offer binding arbitration contracts in the language the patient speaks. CMS previously reported that many Medicare patients are non-English-proficient. Meaningful transparency thus means that educational and legal materials must be in a patient’s preferred language.
These proposals and revisions will be a win-win for both patients and providers, the agency argued.
“We believe this revised approach is consistent with the elimination of unnecessary and excessive costs to providers while enabling residents to make informed choices about important aspects of his or her healthcare,” CMS concluded.
CMS will accept comments on the proposal until 60 days following the proposal’s publication in the Federal Register.