Healthcare Issues

CMS set to roll back nursing home arbitration ban

By Rachel Roubein

02/13/2019 10:31 AM EDT The Trump administration is gearing up to reverse an Obama-era rule that would have made it easier for nursing home residents to take the facilities to court.

A looming CMS final rule is expected to make clear that long-term care facilities can require residents or their families to agree — before a dispute arises — to settle complaints through arbitration rather than litigation. The rule, which late last montharrived at the White House budget office for review, could mark the end of a lengthy fight over legal protections for some of the most vulnerable patients in the health care system.

Nursing homes favor arbitration, arguing it’s fair, cheaper and faster than litigation. Consumer advocates, however, contend the arbitration agreements, which have long been common practice in the nursing home industry, are unjust and force residents to forego lawsuits for negligence or abuse. Further, advocates say patients entering nursing homes are often in a fragile state and unaware they’re signing away their right to sue.

“No nursing home resident or agent is making a truly voluntary decision to choose arbitration at the time of admission to a nursing facility,” said Eric Carlson, directing attorney at Justice in Aging, a national nonprofit legal advocacy organization. “People are under tremendous amount of pressure at that point, and they’re not in a position to make decisions about future dispute resolution procedures.”

Nursing homes had commonly required prospective residents to sign binding pre-dispute arbitration agreements before the Obama administration tried to end the practice in its final months. CMS at the time issued a rule banning the agreements infacilities caring for Medicare and Medicaid patients, citing “significant evidence” such agreements have “a deleterious impact on the quality of care.”

The major nursing home trade group, the American Health Care Association, quickly sued, and a federal judge in November 2016 issued a preliminary injunction blocking the rule. The judge said although he was “sympathetic” to some of the issues the Obama administration sought to address, he expressed skepticism that CMS had the authority to ban arbitration agreements.

The judge never ruled on the the lawsuit’s merits, and the Trump administration moved to stay the case after issuing a new proposal in June 2017 to reverse the Obama administration’s planned ban on arbitration requirements. The Trump administration, which has separately relaxed fines on nursing homes in certain circumstances, said the arbitration ban would have increased health care costs.

“An outright prohibition of arbitration agreements would significantly increase the cost of care, and would require facilities to divert scarce resources from the care of their residents to the defense of expensive litigation,” CMS wrote when announcing the proposed rollback in June 2017.

The final rule formalizing the policy is expected in the coming weeks or months. A spokesperson for CMS in an email said the agency doesn’t comment on policies going through the rulemaking process.

The U.S. Chamber Institute for Legal Reform, which has long backed medical malpractice reform, supports the rollback of the arbitration ban, arguing it is a simpler and faster way of resolving disputes.

“The reality of someone in a long-term care facility, many of them don’t have time to wait years necessarily for the courts to resolve an issue,” said Matt Webb, senior vice president at the institute, which is affiliated with the U.S. Chamber of Commerce.

The Trump administration in its proposed rule included new transparency measures for pre-dispute arbitration agreements, such as requirements for facilities to clearly explain the terms to prospective residents and that residents acknowledge they understand.

The nursing home lobby, AHCA, is pushing the administration to strike those requirements from the final rule, arguing they’re unnecessary and fall outside the agency’s rulemaking authority. In formal comments on the proposed rule, AHCA said patients are already protected by state laws against unfair agreements and that federal arbitration law prevents CMS from making these changes.

Aging and consumer advocates said the Trump administration’s transparency proposal fails to answer their concerns about forced arbitration.

“[Nursing homes] might not be completely forthcoming ,” said Remington Gregg, counsel for civil justice and consumer rights at Public Citizen.

Gregg left open the possibility that consumer groups could file a lawsuit to block the final rule after it’s issued. He said CMS has a “very high burden” to show “why they basically made a 180 [degree turn].”

“All options to protect seniors and protect the Obama-era rule would be on the table,” he said.

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