CMS rule tries to strike balance on arbitration agreements
After much contention between long-term healthcare providers and resident advocates about arbitration agreements, the latest word from the Centers for Medicare & Medication Services (CMS) may not make either side completely happy. Starting September 16, facilities will be allowed to use pre-dispute arbitration agreements again after a 2016 ban and years of legal battles. Proponents for these agreements believe arbitration resolves disputes and claims more quickly and at a lower cost than the courts. However, resident advocates believe arbitration agreements rob residents of their constitutional right to a trial by jury and places them at a disadvantage when they are required to be signed during the admissions process. In the past, groups such as AARP, the American Bar Association and the National Consumer Voice for Quality Long-Term Care have called for pre-dispute arbitration agreements to be prohibited.
In July, CMS announced that arbitration agreements could be used by facilities with the addition of several caveats. Chief among those is that signing an arbitration agreement is not required as a condition for admission or receiving care at a facility. Additionally, the facility must ensure that:
- The resident or their representative are informed of their right to not sign the agreement.
- The agreement is explained to the resident and their representative in a manner and/or language that they understand.
- The resident or their representative acknowledge they understand the agreement.
- The agreement provides for the selection of a neutral arbitrator agreed upon by both parties.
- The agreement provides for an arbitration venue convenient to both parties.
- The agreement must grant the resident and their representative the right to rescind the agreement within 30 days of signing it.
- The agreement must not prohibit or discourage the resident or anyone else from communication with federal, state and local officials.
- When a dispute is resolved through arbitration, a copy of the signed agreement and the arbitrator’s final decision must be retained by the facility for 5 years and be available for inspection upon request by CMS or its designee.
Although not an outright ban on pre-dispute arbitration agreements, which may have been preferable to some, CMS said the new stipulations are aimed at strengthening transparency and helping residents make more informed choices. “We believe that these transparency requirements address many stakeholder concerns regarding the fairness of arbitration in LTC facilities,” CMS wrote in the rule. In a July 24 article published by the American Bar Association, the rule was called “deeply disappointing to resident advocacy groups,” but was praised for having some positive features. The response from one industry proponent was also mixed. After the rule was announced, Mark Parkinson, president and CEO of American Health Care Association (AHCA), stated: “We are still reviewing and evaluating the final rule but we applaud CMS for allowing skilled nursing facilities to use pre-dispute arbitration agreements. We are concerned about CMS adding any conditions or administrative requirements when Congress has spoken on this topic.”
Whether the rule has truly struck a balance between protecting residents and supporting facilities or will face future dispute remains to be seen. However, in less than a month, facilities will face a new set of requirements that hinge on ensuring that their residents and/or their representatives are thoroughly educated about their choices and rights. Processes and documents could change and staff may need to be re-trained. Ultimately, it’s up to the facilities to not only follow the law, but to determine how they will perform the balancing act between efficient and cost-effective operations and serving the needs of residents.