By Wendy S. Salkin
On Wednesday, the Centers for Medicare and Medicaid (CMS)—an agency within the Department of Health and Human Services (HHS)—released a final rule that “will revise the requirements that Long-Term Care facilities [LTCs] must meet to participate in the Medicare and Medicaid programs” (1). (Almost all LTCs receive funds from Medicare or Medicaid.) This is the first time that these requirements have been “comprehensively reviewed and updated since 1991” (6)—that is, in the past 25 years. One of the most striking changes to the regulation is found in §483.65, where CMS “require[es] that facilities must not enter into an agreement for binding arbitration with a resident or their representative until after a dispute arises between the parties” (12) which means that CMS is “prohibiting the use of pre-dispute binding arbitration agreements” (12). Among the reasons provided by CMS for this change is a recognition of the notable power differential between LTCs and their residents:
There is a significant differential in bargaining power between LTC facility residents and LTC facilities. LTC agreements are often made when the would-be resident is physically and possibly mentally impaired, and is encountering such a facility for the first time. In many cases, geographic and financial restrictions severely limit the choices available to a LTC resident and his/her family. LTC facilities are also, in many cases, the resident’s residence. These facilities not only provide skilled nursing care, but also everything else a resident needs. Many of these residents may reside there for a prolonged period of time, some for the rest of their lives. Because of the wide array of services provided and the length of time the resident and his/her family may have interactions with the LTC facility, disputes over medical treatment, personal safety, treatment of residents, and quality of services provided are likely to occur. Given the unique circumstances of LTC facilities, we have concluded that it is unconscionable for LTC facilities to demand, as a condition of admission, that residents or their representatives sign a pre-dispute agreement for binding arbitration that covers any type of disputes between the parties for the duration of the resident’s entire stay, which could be for many years. (402-403)
As The New York Times reported, when the rule was first proposed in July 2015, it was “aimed at improving disclosure.” But, this final version of the rule “went a step further than the draft, cutting off funding to facilities that require arbitration clauses as a condition of admission.”
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