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Legal Alert: Centers for Medicare & Medicaid Services (CMS) Reverses Arbitration Ban

June 9, 2017

Recently, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that reverses the prohibition on pre-dispute binding arbitration agreements for Long-Term Care facilities. The proposed changes will allow Long-Term Care facilities to include binding arbitration agreements as long the agreement is in plain language, is explained to the resident or his or her representative, and is specifically acknowledged by the resident.

The proposed rule was published on June 8, 2017 and removes the provisions that prohibit pre-dispute arbitration agreements for Long-Term Care facilities participating in Medicare and Medicaid Programs. The rule instead strengthens the requirements regarding the transparency of arbitration agreements in Long-Term Care facilities in order to protect and promote the rights of residents. The proposed rule comes after the American Health Care Association (AHCA) challenged the arbitration ban in a federal court, which resulted in the issuance of a preliminary injunction that delayed the enforcement of the ban. After reviewing the court’s ruling, CMS recognized that further analysis was necessary and issued this proposed rule. The proposed rule includes provisions that:

  • Require agreements for binding arbitration agreements to be in plain language;
  • Require the language of the agreement to be in plain writing in the admissions contract if an agreement for binding arbitration is a condition of admission into the facility;
  • Require the agreement to be explained to the resident and his or her representative in a form and manner they understand, including a language they understand;
  • Require the resident to acknowledge that he or she understands the agreement;
  • Prohibit the inclusion of any language that prohibits or discourages the resident or anyone else from communicating with federal, state, or local officials, including federal and state surveyors, other federal or state health department employees, or representatives of the State Long-Term Care Ombudsman;
  • Upon resolution of a dispute with a resident via arbitration, require that the facility retain a copy of the signed agreement for binding arbitration and the arbitrator's final decision for five (5) years so it can be inspected by CMS or its designee; and
  • Require the facility to post a notice regarding its use of binding arbitration in an area that is visible to both residents and visitors.

CMS recognizes that arbitration may allow for efficient resolution of disputes for both the facilities and the residents, which “is likely to place less strain on the relationship between the facility and the residents (and their families).”  The rule is open for comments until August 7, 2017 and can be found at https://www.federalregister.gov/d/2017-11883.

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