On June 29, 2022, the Centers for Medicare & Medicaid Services (CMS) issued revised long-term care (LTC) surveyor guidance further cementing the agency’s disfavor of standardized arbitration agreements that it first expressed in 2016 and underscored in 2019. The new requirements prohibit LTC facilities from requiring residents to sign binding arbitration agreements as a condition of admission to the facility or as a requirement to continue to receive care at that facility, and also demand that LTC facilities allow residents to choose a neutral arbitrator. The facility must also make the arbitrator’s final decision available for review by CMS or its designee.

The new guidance deviates from prior CMS policy in that LTC providers may now be cited by surveyors and subjected to civil monetary penalties (CMP) for noncompliance.  Specifically, the updated guidance now associates enforcement tags, or F-tags, with the arbitration. Meaning, that if surveyors feel a resident is at risk of psychosocial harm by way of the contract formation process or as a result of participating in arbitration, a facility could receive one of these tags. The good news for LTC providers, noncompliance with the arbitration F-tags will almost exclusively consider psychosocial impact according to the CMS surveyor manual, and CMPs would only be imposed on a facility for severe harm.

To determine the suitability of penalties according to the CMS manual, surveyors would gather evidence through interviews, record review, and observation and use the “reasonable person concept” to determine psychosocial severity. Surveyors will have access to a facility’s arbitration awards for five years as part of the guidance. CMS further indicated it wants more transparency regarding relationships between the arbitrator and all parties.

LTC operators should review their current arbitration agreements and related policies to ensure compliance with these new guidelines, considering language, format, font size, and the process of presentation and obtaining resident signatures. Staff training will be vital to smooth rollouts of any new policies. Navigating new guidance can be a complex undertaking and providers should seek legal counsel to advise their efforts.

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