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Regulatory Review – Enforcement Action

Several new methods of enforcement have been imposed on providers throughout the State in the last few months. For this month’s regulatory review, we will focus on the various types of enforcement action that can be imposed on skilled nursing providers certified with the Centers for Medicare & Medicaid Services (CMS), which are included in Chapter 7 of the State Operations Manual (SOM).

CMS or the State may impose one or more remedies in addition to, or instead of, termination of the provider agreement when the State or CMS finds that a nursing home is not in substantial compliance with federal requirements. When determining what (if any) enforcement remedies are selected, the State and/or CMS must identify the scope (number of residents impacted by noncompliance) and the severity (level of harm to the residents impacted by noncompliance) which are represented by letters A-L on the 2567. CMS notes the purpose of enforcement actions is to address the nursing home’s responsibility to promptly achieve, sustain, and maintain compliance with federal requirements. The State and CMS Regional Office (RO) must consider the extent to which noncompliance exists such as the result of a one-time mistake, larger systemic concerns, or an intentional action of disregard for the resident’s health or safety.

In addition, the State and/or CMS must consider which and/or how many remedies to impost based on:

  • The relationship of one deficiency to other deficiencies.
  • The prior history of noncompliance in general, and specifically with reference to the cited deficiencies.
  • The likelihood that the selected remedy(ies) will achieve correction and continued compliance.

An example is provided in the SOM indicating that noncompliance exists because of the nursing home’s failure to spend money, then any civil monetary penalty (CMP) that is imposed should at least exceed the amount saved by not maintaining compliance.

There are three remedy categories that survey agencies and/or CMS has the option to select from based on the deficiencies and scope and severity (S/S) cited during the survey.

Category 1 remedies are used when there are isolated deficiencies that constitute no actual harm with a potential for more than minimal harm but not immediate jeopardy or there is a pattern of deficiencies that constitutes no actual harm with a potential for more than minimal harm but not immediate jeopardy (S/S = D or E).

  • Directed plan of correction
  • State monitoring
  • Directed in-service training

Category 2 remedies are used when there are widespread deficiencies that constitute no actual harm with a potential for more than minimal harm but not immediate jeopardy or one or more deficiencies (regardless of scope) that constitute actual harm that is not immediate jeopardy (S/S = F, G, H, or I). CMS notes that the State Medicaid Agency does not have the statutory authority to impose to impose denial of payment for all Medicare and/or Medicaid residents.

  • Denial of payment for all new Medicare and/or Medicaid admissions.
  • Denial of payment for all Medicare and/or Medicaid residents, imposed only by the CMS RO.
  • Lower range per day CMP
  • Per instance CMP

Category 3 remedies are used when there are one or more deficiencies that constitute immediate jeopardy to resident health or safety. A CMP of $3,050 - $10,000 per day or a CMP of $1,000 per instance may be imposed in addition to the remedies of termination and/or temporary management. Temporary management is also an option when there are widespread deficiencies constituting actual harm that is not immediate jeopardy. (S/S = I, J, K, L).

  • Temporary Management
  • Termination
  • CMPs as indicated in the description.

Termination of the provider agreement may be imposed by the State Medicaid Agency or the RO at any time. Transfer of residents or transfer or residents with closure of the nursing home will be imposed by the State as appropriate. Although temporary management must be imposed when there is a finding of immediate jeopardy and termination is sought, it may also be imposed for lesser levels of noncompliance.

Descriptions of enforcement actions:

  • A directed plan of correction (DPOC) is a plan that the State, CMS RO, or temporary manager develops to require the nursing home to take action within specified time frames. Achieving compliance is ultimately the nursing home’s responsibility, whether or not the DPOC is followed. A directed plan of correction must be dependent upon causes identified. As you may recall, DPOC enforcement actions were utilized heavily during the pandemic when a nursing home received more than one infection control related deficiency and generally required the nursing home to work with the Quality Improvement Organization (QIO) to understand the root cause and also directed staff to complete training from the Centers for Disease Control & Prevention (CDC).
  • Directed In-Service Training is used when the State, CMS, or the temporary manager believes that education is likely to correct the deficiencies cited and help achieve substantial compliance. The nursing home should use programs developed by well-established geriatric health services education such as schools, centers for aging, and area health education centers. When directed in-service training is implemented, the nursing home bears the expense of the training.
  • State monitoring is implemented when a nursing home was identified to have substandard quality of care on three consecutive standard surveys and is optional in other situations such as a poor compliance history, concern by the survey agency that the situation has the potential to worsen, immediate jeopardy exists and no temporary manager can be appointed, the nursing home refuses to relinquish control to a temporary manager, or the nursing home seems unwilling or unable to take corrective action. The frequency of monitoring visits is determined by the survey agency and can occur periodically or 24 hours per day/7 days per week based on the nature and seriousness of the deficiencies and timing and frequency of when the problems occurred. State monitoring is discontinued when the provider agreement is terminated or when they have demonstrated substantial compliance and it is determined they will remain in substantial compliance.
  • Discretionary denial of payment for new Medicare and Medicaid residents may be implemented anytime the nursing home is found to be out of substantial compliance, as long as the nursing home is given written notice at least 2 calendar days before the effective date in immediate jeopardy situations and at least 15 calendar days before the effective date in non-immediate jeopardy situations. The Medicare Administrative Contractors (MACs) will be notified of the denial of payment remedy and will deny payment to the nursing home for all new Medicare admissions after the effective date until substantial compliance is achieved. The State Medicaid Agency will also deny payment to all new Medicaid admissions until substantial compliance is achieved.
  • Mandatory denial of payment for new Medicare and Medicaid residents is imposed when the nursing home is not in substantial compliance three months after the last day of the survey identified deficiencies or when the nursing home has been found to furnish substandard quality of care on the last three consecutive standard surveys. Similar to the discretionary denial of payment above, the MAC will deny all Medicare payments for new admissions and the State Medicaid Agency will deny all Medicaid payments for new admissions. The duration generally lasts until substantial compliance is verified and payments will resume prospectively from the date that substantial compliance was achieved. When this is implemented for repeated instances of substandard quality of care, the remedy may not be lifted until substantial compliance is achieved and CMS/State believes that the nursing home will remain in substantial compliance.
    • Note: section 7506.5 provides several scenarios of residents being admitted and/or readmitted while a nursing home is under denial of payment and whether they are included in the sanction or not.
  • Denial of payment for all Medicare and Medicaid residents is imposed only by CMS. CMS notes that denial of payment for all Medicare and Medicaid residents may be imposed for any instances of noncompliance but due to the severity of the sanction consider factors such as the seriousness of the current survey findings, noncompliance history, and the use of other remedies have failed to achieve or sustain compliance. The duration of this denial of payment is similar to the mandatory denial of payment for new admissions.
  • Civil Monetary Penalties (CMPs) may be imposed for the number of days the nursing home is not in substantial compliance or for each instance of noncompliance, regardless of immediate jeopardy determinations. The per day and per instance CMP cannot be imposed simultaneously during a specific survey, but can be imposed during the same survey cycle if multiple surveys with noncompliance are identified and the per day CMP was not the initial enforcement action imposed. CMS or the State Medicaid Agency may impose CMPs between $3,050 and $10,000 per day of immediate jeopardy or between $50 and $3,000 per day of non-immediate jeopardy. Per instance CMPs can range from $1,000 to $10,000 for each deficiency. CMS and States are encouraged to develop methods for ensuring consistency when issuing CMPs.
  • Temporary Management may be imposed at anytime for noncompliance but when deficiencies constitute immediate jeopardy or widespread actual harm and a decision is made to impose an alternative remedy to termination, the imposition of temporary management is required. The temporary manager’s responsibility is to oversee correction of the deficiencies and assure the health and safety of the resident’s are maintained while the deficiency is being corrected. Temporary managers may also be imposed to oversee the orderly closure of a nursing home. The temporary manager has the authority to hire, terminate, or reassign staff; obligate funds; alter the procedures; and otherwise manage the nursing home to correct the operations. The State is responsible for selecting temporary managers for the nursing homes. The nursing home must agree to relinquish control to the temporary manager and pay their salary. In addition, the nursing home cannot retain authority to approve changes to personnel or expenditures when agreeing to a temporary manager. If the nursing home refuses to relinquish control, they will be provided with a termination notice with an effective date 23 calendar days of the last date of the survey if the immediate jeopardy is not removed.
  • Termination of provider agreement is imposed within 23 days of the last day of the survey which found the immediate jeopardy if the immediacy is not removed by then. In addition, if no immediate jeopardy exists, a provider agreement may be terminated when the nursing home has not achieved substantial compliance within six months of the date of the survey to which they were found to be out of compliance.