CMS lifts ban on nursing home arbitration agreement

The Trump administration has proposed rescinding an Obama-era regulation that prohibits nursing homes from forcing patients and their families to sign binding arbitration agreements as a condition of admission.

The CMS' proposed rule released Monday will prevent the Obama administration's nursing home arbitration ban from ever going into effect, as it had been placed on hold due to litigation. The CMS proposal comes just weeks after the CMS hinted to long-term care advocates that it was in favor of arbitration over litigation for nursing home disputes with residents and their families.

The American Health Care Association, which represents long-term care providers, called the initial ban an "overreach" and praised the CMS for rescinding it.

"Arbitration produces swifter resolution to disputes, compensates residents without undue litigation expense for either party, and reduces the funding burden on the Medicare and Medicaid programs," AHCA President and CEO Mark Parkinson said in a statement.

The Obama administration final rule, released in November, was the first major update to long-term care provider requirements since 1991. The 700-page proposal contained several other revisions to long-term care provider regulations, many of which the Trump administration will preserve.

The new proposed rule still imposes new requirements on nursing home arbitration agreements. Nursing homes must explain the contracts to the resident and his or her representative, and the agreement cannot contain any language that prohibits or discourages the resident or anyone else from communicating with federal, state or local officials.

The CMS also introduced new requirements in the newly proposed rule, suggesting that binding arbitration agreements must contain plain language rather than legal jargon in order to be a condition of admission. Facilities would also have to post notices describing their arbitration policies in plain language for residents and visitors to see.

"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," the agency said in the rulemaking.

Arbitration agreements prevent families who believe their loved ones received bad care at nursing homes from suing. Some families say they often feel pressured to sign the contracts and don't understand what they're agreeing to. They only find out later that awards through arbitration in nursing home cases are usually lower than those reached in court.

The nursing home industry prefers arbitration since it offers a less costly alternative to lawsuits. The cost of prolonged cases, along with falling reimbursement rates, could force some nursing homes to close, industry stakeholders say.