Comparing Regulatory Enforcement of Hospitals and Long-Term Care Facilities

Polsinelli PC. In California, Polsinelli LLP

Comparing Regulatory Enforcement

of Hospitals and Long-Term Care

Facilities

Jason T. Lundy

real challenges. real answers. sm

Hospitals


Hospitals

Holds a license per its State’s hospital

licensure statute

Participates in Medicare by virtue of CMS

certification per federal regulations (42

CFR 482.1, et seq.)


Hospitals

Federal certification regulations for Hospitals

are comprised of 23 Conditions of Participation,

each of which has one or more Standards

– Usually a Standard equates to a subpart of a Section

482 regulation

CMS interpretive guidance for the Hospital

Conditions of Participation and Standards is

found at the State Operations Manual,

Appendix A


Deemed Status

Hospitals that are accredited by a CMS-

approved Accrediting Organization (i.e.,

The Joint Commission) are “deemed” to

meet all Conditions of Participation for

Medicare participation. 42 CFR 488.4


Surveys

Apart from accreditation, Hospitals may face a

validation survey or a complaint survey. 42

CFR 488.9

Surveys are performed by a State Survey

Agency under agreement with CMS

The State Survey Agency is usually the State’s

department of health that also has responsibility

for hospital licensing


Validation Surveys

CMS selects a sample of Hospitals with

Accreditation Organization deemed status and

independently surveys the Hospitals to validate

whether the Accreditation Organization’s

process is adequately evaluating compliance

with the Medicare Conditions of Participation

and Standards.

– Validation surveys can be general, reviewing all

Conditions of Participation, or just surveys on specific

Conditions of Participation.


Complaint Surveys

The State Survey Agency does an

inspection in response to a substantial

allegation of noncompliance


Loss of Accreditation

If an Accreditation Organization informs

CMS that it has terminated a Hospital’s

accreditation due to noncompliance with

accreditation standard, the State Survey

Agency conducts a survey to evaluate

compliance with Medicare Conditions of

Participation.


Survey Findings

Noncompliance with a Medicare regulation

is cited as a “deficiency,” at either a

Condition-level or a Standard-level.


Survey Finding: Standard-Level Deficiency

If a Hospital is out of compliance at a

Standard-level only, it may continue

participation in Medicare.

The Hospital must submit a Plan of

Correction to the State Survey Agency,

explaining how it will correct each deficiency

to regain substantial compliance.

– The POC is generally expected to be completed

in 60 days.


Survey Finding: Condition-Level Deficiency

If a Hospital is out of compliance at a Condition-

level deficiency, the Hospital loses its “deemed”

status.

– It no longer satisfies the Medicare requirements by virtue

of its accreditation and falls under State Survey Agency

jurisdiction.

The Hospital must likewise submit a POC to the

State Survey Agency, explaining how it will correct

each deficiency to regain substantial compliance,

and make a “credible allegation of compliance.”


Survey Findings

There is not a bright-line test whether

noncompliance constitutes a Condition- or

Standard-level deficiency.

– It is left to the judgment of the surveyors based on the

seriousness and prevalence of the noncompliance.

A Hospital must submit a POC for each

deficiency cited by the State Survey Agency.

– The POC is due to the State Survey Agency within 10

days of the Hospital’s receipt of the survey findings.


Revisit Survey

After the Hospital submits a POC, the State

Survey Agency decides if the POC is acceptable

and prepares to conduct a revisit survey to re-

evaluate compliance.

Although the State Survey Agency is generally

supposed to review the POC and perform a

revisit survey about 45 days after the survey

findings are issues, in reality revisit surveys are

often done a few months later.


Revisit Survey

If a Hospital is only cited with Standard-level

deficiencies, the State Survey Agency may not

even conduct a revisit.

– The Hospital may continue participation in Medicare

with Standard-level deficiencies.

If a Hospital is cited with Condition-level

deficiencies, the State Survey Agency must

perform a revisit.

– The revisit cannot occur until after the Hospital

submits a POC with credible allegations of

compliance.


Enforcement Actions

If a Hospital is out of compliance with a

Condition-level deficiency, it is placed on a

track for termination of its participation in

Medicare.


Enforcement Action: Immediate Jeopardy

If the deficiency is an Immediate Jeopardy

(“. . . has caused or is likely to cause

serious injury, harm, impairment or death”

to a patient) that is uncorrected by the end

of a survey, the Hospital is on a 23-day

track for Medicare termination.


Enforcement Action: Condition-Level

If the deficiency is a Condition-level (or an

Immediate Jeopardy corrected before the

23rd day), the Hospital is on a 90-day

track for Medicare termination.


Enforcement Action

15 days prior to a threatened Medicare

termination date, CMS publishes notice of

the Hospital’s pending termination in a

local newspaper.


Appeals

The notice of the survey findings and placement

on a termination track (from the State Survey

Agency or CMS) also informs the Hospital of its

right to appeal the termination.

The Hospital has 60 days from the notice to file

a request for hearing with the HHS Departmental

Appeals Board (DAB).

Appeals are governed by 42 CFR 498.1, et seq.


Appeals

The 60-day deadline usually occurs before a

revisit is done or the outcome of the revisit is

known.

Be safe and always request a hearing prior to

the 60-day deadline to preserve appeal

rights!

The appeal may be withdrawn once the threat of

termination is lifted.


Revisit Outcomes

An acceptable and timely POC with

credible allegations of compliance usually

enables the State Survey Agency to

recommend that CMS extend the

threatened termination date (past the 90-

day track) to allow time for the State

Survey Agency to conduct a revisit.


Revisit Outcomes

If the revisit finds the Hospital to be back

in compliance with all Medicare Conditions

of Participation:

– The Medicare termination track is rescinded.

– The Hospital regains its “deemed” status and

returns to the jurisdiction of the Accreditation

Organization.


Revisit Outcomes

If the revisit finds the Hospital to still be

noncompliant with a Medicare Conditions

of Participation:

– The Hospital stays on the termination track.

– The Hospital must submit another POC with

credible allegations of compliance.

– The State Survey Agency must conduct

another revisit.


Revisit Outcomes

Will the State Survey Agency request another

extension of the threatened termination date???

How many times will CMS agree to extend the

termination track???

Two or three unsuccessful revisits may result in

CMS declining to extend the termination date

and a Hospital on the verge of termination from

the Medicare program.


Imminent Termination

A Hospital may face imminent termination from

Medicare at the end of its termination track when

it has an uncorrected Immediate Jeopardy, its

POC has been rejected, has had unsuccessful

revisit surveys, or the State Survey Agency/CMS

indicated that another revisit will not be

conducted.


Imminent Termination

A common strategy is to file a lawsuit in federal court

challenging the CMS action and seeking a TRO to enjoin

the termination.

Typically, the TRO motion is defeated because the

Hospital has not exhausted its administrative remedies

(the appeal to the DAB pursuant to 42 CFR 498.40 is the

exclusive administrative remedy)

But, in such a drastic situation, it is likely worth the

gamble for whatever chance to put the brakes on the

termination.


State Licensure Enforcement Actions

In parallel with the federal Medicare

certification process, the State’s licensure

statute has provisions to pursue

revocation of a Hospital’s license as well

as other licensure sanctions.

These actions are very rare.


Nursing Homes


Nursing Homes

Holds a license per its State’s nursing home

licensure statute

Participates in Medicare by virtue of CMS

certification per federal regulations (42 CFR

483.1, et seq.)

– Skilled Nursing Facilities (SNF) = Medicare- or dually-

certified

– Nursing Facilities (NF) = Medicaid-only certified

CMS interpretive guidance for the Nursing Home

requirements is found at the State Operations

Manual, Appendix PP


Nursing Homes

Nursing Home requirements are not

classified as Conditions of Participation or

Standards; any level of deficiency will

threaten a Nursing Home’s certification

NO “deemed” status for Nursing Homes;

even if a Nursing Home has some sort of

accreditation, the Nursing Home is fully under

the State Survey Agency’s jurisdiction


Surveys

Nursing Homes have Annual, incident

report investigation, and complaint

surveys.


Annual Survey

Each Nursing Home must have an Annual

survey by its State Survey Agency.

Should occur in a window between 9 and 15

months after the Nursing Home’s previous

Annual survey.

Consists of an evaluation with the federal

certification requirements of 42 CFR 483 as well

as evaluation of Life Safety Code compliance.


Incident Report Investigation

Nursing Homes are required to self-report

certain incidents to the State Survey

Agency.

The State Survey Agency has discretion to

conduct a survey in response to a Nursing

Home’s incident reporting.


Complaint Surveys

The State Survey Agency has an intake

process for Nursing Home complaints,

typically a hotline call-in number.

Usually the State Survey Agency is

required to conduct an on-site survey on

every complaint lodged against a Nursing

Home, regardless of whether the

complaint seems credible or not.


Surveys

This framework usually results in Nursing

Homes having many more surveys, on a

more frequent basis, than Hospitals.


Survey Findings

Noncompliance with a Nursing Home

standard is cited as a deficiency, and then

assigned a Scope and Severity.

Scope = isolated widespread

Severity = potential for no more than

minimal harm Immediate Jeopardy


Scope and Severity

Isolated Pattern Widespread

Immediate

JeopardyJ K L

Actual Harm G H I

The Potential for

more than

Minimal Harm

D E F

The potential for

no more than

minimal harm

A B C


Immediate Jeopardy

If an Immediate Jeopardy deficiency is

cited, the Nursing Home must submit a

“Plan of Abatement” (a/k/a “Plan of

Removal”) to the State Survey Agency.

An “unabated” Immediate Jeopardy puts a

Nursing Home on a 23-day fast track for

termination from the Medicare program.


Immediate Jeopardy

If the State Survey Agency determines

that the Immediate Jeopardy is abated or

removed, the Nursing Home must still

provide a separate POC for the deficiency

once the full survey findings are issued.


Survey Cycle

Once the State Survey Agency has

determined that a Nursing Home is not in

“substantial compliance” with all federal

certification requirements (i.e., the Nursing

Home has been cited with a deficiency),

the Nursing Home is in “cycle”.


Survey Cycle

Once in, a Nursing Home stays in a “cycle”

until the State Survey Agency certifies that

the Nursing Home has regained

substantial compliance with all

requirements.

CMS “remedies” (i.e., enforcement

sanctions) against the Nursing Home flow

from and run the duration of the “cycle”.


Survey Cycle

Once a survey cycle is open, a Nursing

Home’s top priority should be to close the

cycle.

Arguments about survey findings or

remedies may be pursed after the cycle is

closed.


POC

A Nursing Home must submit a POC for

each deficiency cited by the State Survey

Agency.

The POC is due to the State Survey

Agency within 10 days of the Nursing

Home’s receipt of the survey findings.


IDR

Informal Dispute Resolution (IDR)

– method for Nursing Home to contest the

survey findings with the State Survey Agency

– same due-date as the POC, within 10 days of

the Nursing Home’s receipt of the survey

findings.


IDR

Submit written arguments against the

deficiency, including supporting

documents and exhibits

– some States allow in-person arguments or

outsource the IDR to a private agency

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IDR

Organize arguments around themes:

Survey findings are factually wrong.– Here are the correct facts.

Surveyor missed important info.– Here it is (documented).

Surveyor made an improper conclusion. – Here is what really happened or what those documents

really mean.

Surveyor thinks the regulation requires certain action.– The regulation requires this, but not that.

This was not an Immediate Jeopardy.


IDR

Don’t bother with these arguments:

“We’ve never been cited with this before.”

“But the surveyor said . . .”

“There is this other facility that had a far worse

problem and the state didn’t do anything to

them.”

“We are a good facility with good staff.”

“Look at how quickly we addressed it.”

“It was the fault of a rogue staff.”


Revisit Survey

After the Nursing Home submits a POC—

and after the latest “completion date” listed

on the POC—the State Survey Agency

decides if the POC is acceptable and

prepares to conduct a revisit survey to re-

evaluate compliance.

Desk-review vs. On-site


Desk-Review Revisit Survey

The State Survey Agency evaluates compliance by

review of the written POC and examination of documents

that show corrective actions were accomplished.

Available for low Scope & Severity deficiencies (D, E,

Fs) and Nursing Homes with good compliance histories

No need for surveyors to return for an on-site inspection.

– Quicker determination of compliance.

– No danger of surveyors stumbling into another

deficiency.


On-Site Revisit Survey

The State Survey Agency sends surveyors back out to

facility for in-person inspection.

Must have an on-site revisit to high Scope & Severity

deficiencies and for poor compliance history

Takes time for State Survey Agency to re-schedule a

survey team, likely weeks.

– Cycle remains open and remedies accrue during the meantime

Should be limited to deficiencies addressed by POC, but

surveyors will cite other deficiencies for obvious

noncompliance.


Revisit Outcomes

Possible outcomes:

1) Finds the facility to be in substantial

compliance, clears all tags.

– State Survey Agency will issue a 2567B

(“Post-certification Revisit Report”); this is a

good document!

– Note the completion dates

– Remedies are discontinued


Revisit Outcomes

Possible outcomes (continued):

2) Re-citation of deficiencies

– Cycle stays open

– Remedies continue to run (getting closer to

termination)

– Start over again with the process: get another

2567, submit a POC, need another revisit

– Will you get another revisit before

termination?


Revisit Outcomes

Possible outcomes (continued):

3) Intervening surveys – a complaint or

incident report investigation

– All deficiencies must be corrected and

cleared, in addition to preexisting surveys, in

order to close the cycle

– Additional deficiencies to totally clear before

termination

– Time-crunch


Revisit Outcomes

Nursing Home is entitled to two revisits in a

survey cycle; to get a third revisit, the State

Survey Agency must get permission from CMS.

Sometimes revisit surveys are packaged with

Annual surveys or complaints.

– Danger of “wasting” a revisit that does not close the

cycle.

– Try to work with the State Survey Agency to manage

revisits (although all will be unannounced).


Remedies

Intermediate Sanctions

Unlike Hospitals, Nursing Homes do not

face all-or-nothing sanctions

Remedies accrue and accumulate

throughout the survey cycle, up until the

date of Medicare termination

– (gee, thanks!)


Remedies

“Proposed” remedy – still an opportunity to

correct the deficiency before the remedy

goes into effect.

“Recommended” remedy – the State

Survey Agency suggests, but it is up to

CMS to impose.

“Imposed” remedy – remedy is in effect,

and Nursing Home has an appeal right.


Remedies

Category 1

– Directed Plan of Correction

– Directed in-service

– State Monitor

Category 2

– Civil Money Penalty ($50-$3,000 per day)

– Denial of Payments for New Admissions

– Denial of Payments for all admissions


Remedies

Category 3

– Temporary management

– Termination

– Civil Money Penalty ($3,050 - $10,000 per

day)

Other

– Per-instance Civil Money Penalty ($1,000-

$10,000 per instance)


Remedies

Mandatory Remedies

90 days into the survey cycle = Denial of

Payments for New Admissions (DPNA)

180 days into the survey cycle =

Termination from Medicare program

These deadlines cannot be extended.

– (Only discretion is to impose them sooner.)


Remedies

DPNA: mandatory at 90 days into cycle; State

Survey Agency or CMS can impose

Discretionary DPNA, effective even earlier.

Typically has a cumulative effect:

– A few days of DPNA do not cause huge financial

loss

– Weeks or months of DPNA can put $100,000s of

Medicare/Medicaid reimbursement at stake

– Back-dating compliance to POC completion date

shrinks DPNA


Remedies

CMP: Per-day levels can fluctuate during cycle:

Example:

– $200/day from beginning of cycle on March 1

– $3,050/day from March 15 through March 31 for an

Immediate Jeopardy citation;

– Return to $200/day from April 1;

– Increase to $450/day from April 10 due to complaint

survey citing a “G” Scope and Severity deficiency;

– Discontinued on May 1 with successful revisit survey,

closing cycle.

– [Total = $62,400]


Remedies

Termination: If the survey cycle remains open

upon day 180, Nursing Home is automatically

terminated from Medicare

Game over

– Automatically triggers Medicaid termination too

– May automatically trigger a State licensure revocation

– Once terminated, re-certification requires an initial

survey, a period of “reasonable assurance”, and a

follow-up survey; often a ~6 month process


Appeals

60 days from receipt of notice

Request for appeal must outline the issues to be considered at appeal.

Should appeal all notices.

Filing appeal wipes out “automatic” 35% reduction in CMP.

Appeal does not stay most remedies (CMP is escrowed).


Decision Not To Appeal

35% reduction of CMP

Must affirmatively waive right to appeal by

letter to CMS.


Issues for Appeal

Were any remedies imposed? No remedies, no

appeal.

– Recent cases suggest a change due to compliance

history’s effect on 5-Star Rating

Immediate Jeopardy – due to its effect on

remedies

Date of Compliance – affirmative evidence

showing correction prior to date selected by

surveyors



Frequently, the State Survey Agency will cite

a Nursing Home with “me-too” licensure

violations that are word-for-word identical to

cited federal certification deficiencies.

This especially happens with Immediate

Jeopardy determinations and allegations of

serious noncompliance.



States also vary widely in their enforcement

mentality and aggressiveness with

imposing fines and other sanctions.

A Nursing Home often has to defend two

parallel cases (CMS certification and State

licensure), with separate sanctions, based

on the same survey.


Assisted Living


Assisted Living

Holds a license per its State’s assisted living

licensure statute

Medicare does not cover Assisted Living—no

federal certification, no CMS interpretive

guidance, and no federal surveys.

The State Survey Agency conducts inspections

for licensure only.


Assisted Living

Some States cover Assisted Living (or a form of

“assisted living”) through a Medicaid-waiver

program. Enforcement of Medicaid-covered

assisted living will be conducted pursuant to

State law.

Generally, Assisted Living survey enforcement is

not as mature/punitive as Nursing Home

enforcement.


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Comparing Regulatory Enforcement of Hospitals and Long-Term Care Facilities