82 FR 26649 - Medicare and Medicaid Programs; Revision of Requirements for Long-Term Care Facilities: Arbitration Agreements

DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services

Federal Register Volume 82, Issue 109 (June 8, 2017)

Page Range		26649-26653
FR Document		2017-11883

This proposed rule would revise the requirements that Long- Term Care (LTC) facilities must meet to participate in the Medicare and Medicaid programs. Specifically, it would remove provisions prohibiting binding pre-dispute arbitration and strengthen requirements regarding the transparency of arbitration agreements in LTC facilities. This proposal would support the resident's right to make informed choices about important aspects of his or her health care. In addition, this proposal is consistent with our approach to eliminating unnecessary burden on providers.

Federal Register, Volume 82 Issue 109 (Thursday, June 8, 2017)

[Federal Register Volume 82, Number 109 (Thursday, June 8, 2017)]
[Proposed Rules]
[Pages 26649-26653]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2017-11883]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 483

[CMS-3342-P]
RIN 0938-AT18

Medicare and Medicaid Programs; Revision of Requirements for
Long-Term Care Facilities: Arbitration Agreements

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This proposed rule would revise the requirements that Long-
Term Care (LTC) facilities must meet to participate in the Medicare and
Medicaid programs. Specifically, it would remove provisions prohibiting
binding pre-dispute arbitration and strengthen requirements regarding
the transparency of arbitration agreements in LTC facilities. This
proposal would support the resident's right to make informed choices
about important aspects of his or her health care. In addition, this
proposal is consistent with our approach to eliminating unnecessary
burden on providers.

DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on August 7, 2017.

ADDRESSES: In commenting, please refer to file code CMS-3342-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one
of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-3342-P, P.O. Box 8010,
Baltimore, MD 21244-1850.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-3342-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
4. By hand or courier. Alternatively, you may deliver (by hand or
courier) your written comments ONLY to the following addresses prior to
the close of the comment period:
a. For delivery in Washington, DC--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, Room 445-G, Hubert
H. Humphrey Building, 200 Independence Avenue SW., Washington, DC
20201.
(Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without Federal government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing
by stamping in and retaining an extra copy of the comments being
filed.)
b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, 7500 Security
Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
call telephone number (410) 786-9994 in advance to schedule your
arrival with one of our staff members.
Comments erroneously mailed to the addresses indicated as
appropriate for hand or courier delivery may be delayed and received
after the comment period.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: LTC Regulations Team: Diane Corning,
Sheila Blackstock or Lisa Parker at (410) 786-6633.

SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: http://www.regulations.gov. Follow the search

[[Page 26650]]

instructions on that Web site to view public comments.
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.

I. Background

On October 4, 2016, we published in the Federal Register a final
rule entitled ``Reform of Requirements for Long-Term Care Facilities''
(81 FR 68688) (2016 final rule). The 2016 final rule amended 42 CFR
483.70(n) to prohibit long-term care (LTC) facilities from entering
into pre-dispute arbitration agreements with any resident or his or her
representative or requiring that a resident sign an arbitration
agreement as a condition of admission to the LTC facility. Prior to the
2016 final rule, the Requirements for Long-Term Care Facilities were
silent on any arbitration requirements. However, the Centers for
Medicare & Medicaid Services (CMS) did issue sub-regulatory guidance
that supported arbitration between residents and their facilities. See
Fairness in Nursing Home Arbitration Act of 2008: Hearing on H.R. 6126
Before the Committee on the Judiciary, 110th Cong. (2008) (letter from
Department of Health and Human Services dated July 29, 2008 opposing
the H.R. 6126 that would have made pre-dispute mandatory arbitration
agreements between long-term care providers and residents
unenforceable); and Binding Arbitration in Nursing Homes, Survey and
Certification Letter dated January 9, 2003 (S&C-03-10).
The 2016 final rule also requires that an agreement for post-
dispute binding arbitration must be entered into by the resident
voluntarily, that the parties must agree on the selection of a neutral
arbitrator, and that the arbitral venue must be convenient to both
parties. Under the 2016 final rule, an arbitration agreement could be
signed by another individual only if allowed by the relevant state's
law, all of the other requirements in this section are met, and that
individual had no interest in the facility. In addition, the rule
stated that a resident's right to remain at the facility could not be
contingent upon the resident or his or her representative signing an
arbitration agreement. The arbitration agreement also could not contain
any language that prohibited or discouraged the resident or anyone else
from communicating with federal, state, or local officials, including
but not limited to, federal and state surveyors, other federal and
state health department employees, and representatives of the Office of
the State Long-Term Care Ombudsman, in accordance with Sec. 483.10(k).
In addition, when a LTC facility and a resident resolved a dispute
through arbitration, a copy of the signed agreement for binding
arbitration and the arbitrator's final decision was required to be
retained by the facility for 5 years and be available for inspection
upon request by the CMS or its designee.
We adopted the 2016 final rule after considering a wide range of
comments from diverse array of individuals and organizations. For
example, we noted that:

Many commenters argued that arbitration was beneficial for
residents and their families as well as facilities. Disputes could
be resolved more quickly and with less animosity and expense than
litigation. Some commenters also argued that prohibiting these
agreements would only benefit lawyers, result in protracted
litigation, increased costs to the facilities, and increase the
burden on an already overwhelmed court system. This would also
result in resources for resident care being diverted for litigation.
Other commenters argued that prohibiting arbitration could be
detrimental to residents.

In response to these comments, we recognized unequivocally that
``[t]here are both advantages and disadvantages associated with both
pre-dispute arbitration agreements and arbitration itself.'' We weighed
those advantages and disadvantages when we reversed existing policy
through the adoption of the 2016 final rule.
On October 17, 2016, the American Health Care Association and a
group of affiliated nursing homes filed a complaint in the United
States District Court for the Northern District of Mississippi seeking
a preliminary and permanent order enjoining agency enforcement of the
prohibition on pre-dispute arbitration agreements regulation (Sec.
483.70(n)(1)). On November 7, 2016, thirty-four days after the issuance
of the regulation prohibiting pre-dispute arbitration agreements, the
district court preliminarily enjoined enforcement of that regulation.
On December 9, 2016, we issued a nation-wide instruction to State
Survey Agency Directors, directing them not to enforce the 2016 final
rule's prohibition of pre-dispute arbitration provisions during the
period that the court-ordered injunction remained in effect (S&C: 17-
12-NH) https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/SurveyCertificationGenInfo/Downloads/Survey-and-Cert-Letter-17-12.pdf).
The district court held that the plaintiffs were likely to prevail
in their challenge to the 2016 final rule. It concluded that it would
likely hold that the rule's prohibition against LTC facilities entering
into pre-dispute arbitration agreements was in conflict with the
Federal Arbitration Act (FAA), 9 U.S.C. 1 et seq. The court also
reasoned that it was unlikely that CMS could justify the rule, or could
overcome the FAA's presumption in favor of arbitration, by relying on
the agency's general statutory authority under the Medicare and
Medicaid statutes to establish rights for residents (sections
1891(c)(1)(A)(xi) and 1919(c)(1)(A)(xi) of the Act) or to promulgate
rules to protect the health, safety and well-being of residents in LTC
facilities (sections 1819(d)(4)(B) and 1919(d)(4)(B) of the Act).
We have determined that further analysis is warranted before any
rule takes effect. We believe that a policy change regarding pre-
dispute arbitration will achieve a better balance between the
advantages and disadvantages of pre-dispute arbitration for residents
and their providers. Additionally, we have reviewed the ``Requirements
for Long-Term Care Facilities,'' consistent with the January 30, 2017
Executive Order ``Reducing Regulation and Controlling Regulatory Costs
(E.O. 13771). We believe that a ban on pre-dispute arbitration
agreements would likely impose unnecessary or excessive costs on
providers. We invite comments on our revised approach.

II. Provisions of the Proposed Regulations

We are proposing to revise the provisions related to pre-dispute
arbitration at Sec. 483.70(n). Specifically, we propose to remove the
requirement at Sec. 483.70(n)(1) precluding facilities from entering
into pre-dispute agreements for binding arbitration with any resident
or resident's representative, which we do not believe strikes the best
balance between the advantages and disadvantages of pre-dispute
arbitration. For the same reason, we also propose removing the
prohibition at Sec. 483.70(n)(2)(iii) banning facilities from
requiring that residents sign arbitration agreements as a condition of
admission to a facility. And, we propose removing the provisions at
Sec. 483.70(n)(2)(ii) regarding the terms of arbitration agreements.
We would retain provisions that protect the interests of LTC
residents in situations where a facility chooses to

[[Page 26651]]

ask a resident or his or her representative to enter into an agreement
for binding arbitration (whether pre-dispute or post-dispute). We
propose to retain the requirements that the agreement be explained to
the resident and his or her representative in a form and manner that he
or she understands, including in a language that the resident and his
or her representative understands; and the resident acknowledges that
he or she understands the agreement. We also propose to retain the
requirements that the agreement must not contain any language that
prohibits or discourages the resident or anyone else from communicating
with federal, state, or local officials, including but not limited to,
federal and state surveyors, other federal or state health department
employees, and representatives of the Office of the State Long-Term
Care Ombudsman, in accordance with Sec. 483.10(k).
Finally, we would retain the requirement that when the facility and
a resident resolve a dispute through arbitration, a copy of the signed
agreement for binding arbitration 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.
We propose to add a requirement that the facility must ensure that
the agreement for binding arbitration is in plain language. If an
agreement for binding arbitration is a condition of admission, it must
be in plain writing in the admission contract. We also propose to
require facilities to post a notice in plain language that describes
its policy on the use of agreements for binding arbitration in an area
that is visible to residents and visitors. We believe this revised
approach is consistent with the elimination of unnecessary and
excessive costs to providers while enabling residents to make informed
choices about important aspects of his or her healthcare.
The provisions contained in this document are authorized by the
Secretary of the Department of Health and Human Services (Secretary)
general rulemaking authority under sections 1102 and 1871 of the Act.
In those provisions, the Congress granted the Secretary broad authority
to promulgate regulations as may be necessary to administer Medicare
and Medicaid programs.
The agency has statutory authority to issue these rules under the
authority granted by the Congress in the Nursing Home Reform Act, part
of the Omnibus Budget Reconciliation Act of 1987 (OBRA 87), Public Law
100-203, 101 Stat. 1330 (1987). That statute amended sections 1819 and
1919 of the Act, authorizing the agency to promulgate regulations that
are ``adequate to protect the health, safety, welfare, and rights of
residents and to promote the effective and efficient use of public
moneys.'' (Sections 1819(f)(1) and 1919(f)(1) of the Act). In addition,
the Social Security Act authorizes the Secretary to impose ``such other
requirements relating to the health and safety [and well-being] of
residents as [he] may find necessary.'' (Sections 1819(d)(4)(B) and
1919(d)(4)(B) of the Act). Under sections 1819(c)(1)(A)(xi) and 1919
(c)(1)(A)(xi) of the Act, the Secretary may also establish ``other
right[s]'' for residents, in addition to those expressly set forth in
the statutes and regulations, to ``protect and promote the rights of
each resident.'' This proposed rule does not purport to regulate the
enforceability of any arbitration agreement, and does not pose any
conflict with the language of the FAA.
As noted, we have reconsidered whether a complete ban on pre-
dispute arbitration agreements does, in fact, promote efficiency and
fairness. Upon reconsideration, we believe that arbitration agreements
are, in fact, advantageous to both providers and beneficiaries because
they allow for the expeditious resolution of claims without the costs
and expense of litigation. This conclusion is reinforced by comments we
received in response to the July 16, 2015 proposed rule (80 FR 42168).
In those comments, a number of commenters pointed out the advantages of
arbitration for residents and facilities. Specifically, commenters
noted that the amount of time and expense associated with arbitration
is less than that for litigation in most cases. To view public comments
received on the Reform of Requirements for Long-Term Care Facilities
proposed rule (80 FR 42167), visit http://www.regulations.gov. Enter
the Docket ID: ``CMS-2015-0083'' in the search bar and follow the links
provided. For additional assistance with viewing public comments,
follow the search instructions on that Web site.
A number of commenters also noted that disputes resolved through
arbitration could be resolved more quickly than those that go through
the litigation process. Between the trial and appeals, it could take
years for a case to go through the court system. For an elderly
resident, this could mean no resolution in their lifetime. In addition,
although there are costs associated with arbitration, litigation can
also be costly for a resident.
We are also concerned about the effect that judicial litigation
could have on residents who continue to reside in the same facility.
Judicial actions are necessarily adversarial. Arbitrations may be less
adversarial. Since arbitration is something that the parties have
already agreed to, and since it has the potential to resolve a dispute
faster and more efficiently than litigation, we believe it is likely to
place less strain on the relationship between the facility and the
residents (and their families).
Upon reconsideration and subsequent review of the comments we
received from facilities responding to the July 2015 proposed rule, we
also believe that the 2016 final rule may have underestimated the
financial burdens placed on providers who are forced to litigate claims
in court. These commenters pointed out that arbitration is often less
financially burdensome than a court case, and that facilities who must
litigate claims in court must devote scarce resources to defending
cases.
We acknowledge comments received in response to our earlier
rulemaking expressing concern about the use of arbitration agreements
in LTC facilities. The commenters stated that, given their age and/or
physical or mental condition, many residents may be signing these
agreements without fully understanding their terms. Commenters also
expressed concern that confidentiality clauses may prohibit the
resident and others from discussing any incidents with individuals
outside the facility, such as surveyors and representatives of the
Office of the State Long-Term Care Ombudsman because these restrictions
could create barriers for surveyors and other responsible parties to
obtain information related to serious quality of care issues.
We believe that this proposed rule would sufficiently address these
concerns because it would strengthen the requirements necessary to
ensure the transparency of arbitration agreements in LTC facilities,
and would ensure that arbitration agreements did not contain language
discouraging interested parties from communicating with federal, state,
or local officials.
Furthermore, in light of the protections for residents that we are
proposing to include in this rulemaking, our reconsideration of the
conclusions of the rule discussed above, and subsequent review of the
public comments that we received on the July 16, 2015 proposed rule (80
FR 42168) expressing support of arbitration in LTC settings, we now
believe that an outright ban on pre-dispute arbitration agreements and
the further restrictions on post-dispute arbitration agreements do not
strike the best policy balance. An

[[Page 26652]]

outright prohibition of arbitration agreements would significantly
increase the cost of care, and would require facilities to divert
scarce resources from the care of their residents to the defense of
expensive litigation.
In short, upon reconsideration, we believe that a ban on pre-
dispute arbitration agreements is not the appropriate policy for all
residents. Residents or their representatives should be able to make
the decision to sign a pre-dispute arbitration agreement as long as
there is transparency in the arbitration process. Furthermore, we
believe this proposed rule is consistent with the FAA. Therefore, we
are proposing to modify the 2016 final rule.

III. Collection of Information Requirements

Under the Paperwork Reduction Act of 1995, we are required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.

Omnibus Budget Reconciliation Act of 1987 Waiver

Ordinarily, we are required to estimate the public reporting burden
for information collection requirements for this regulation in
accordance with chapter 35 of title 44, United States Code. However,
sections 4204(b) and 4214(d) of the Omnibus Budget Reconciliation Act
of 1987, Public Law 100-204 (OBRA '87) provide for a waiver of
Paperwork Reduction Act (PRA) requirements for this regulation. Thus,
we have not provided an estimate for any paperwork burden related to
these proposed revisions and additions.
If you comment on this information collection, that is, reporting,
recordkeeping or third-party disclosure requirements, please submit
your comments electronically as specified in the ADDRESSES section of
this proposed rule.
Comments must be received on/by August 7, 2017.

IV. Response to Comments

Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and, when we proceed with a subsequent document, we will respond to the
comments in the preamble to that document.

V. Regulatory Impact Statement

A. Statement of Need

The district court's decision in granting the preliminary
injunction against enforcement of the prohibition on pre-dispute
arbitration agreements indicated that CMS would at a minimum face some
substantial legal hurdles from pursuing the arbitration policy set
forth in the 2016 final rule. We have reviewed the provisions and
determined that the arbitration requirements should be revised. We
believe that the protections for residents that we are proposing in
this rulemaking strike a better balance of competing policy concerns.
The revisions to these requirements in this proposed rule will increase
transparency in LTC facilities that chose to use arbitration.

B. Overall Impact

Posting a Notice Regarding the Facility's Use of Arbitration Agreements
We are proposing that LTC facilities post a notice regarding the
use of arbitration agreements in an area that is visible to residents
and visitors. This would require the facility to develop a notice and
post it in a conspicuous area. We believe that notices concerning
facility practices are periodically developed, reviewed, and updated as
a standard business practice. We also believe that facilities that are
already using arbitration agreements post some type of notice. Thus,
there is no burden associated with the posting of this notice.

C. Summary of Impacts

As discussed above, we believe that developing and posting a notice
regarding a facility's practices is standard business practice. Thus,
we have not estimated a cost for those activities.

D. Cost to the Federal Government

In the 2016 final rule (81 FR 68688 and 68844), we anticipated that
the initial federal start-up costs for the entire rule would be between
$10 and $15 million. Once the rule was implemented, improved surveys to
review the new requirements would require an estimated $15 to $20
million annually in federal costs. Any costs to federal government
regarding arbitration requirements were accounted for in the estimates
set forth in the 2016 final rule. We do not believe that these
revisions would impose any additional costs.

E. Regulatory Review Costs

If regulations impose administrative costs on private entities,
such as the time needed to read and interpret this proposed rule, we
should estimate the cost associated with regulatory review. Due to the
uncertainty involved with accurately quantifying the number of entities
that will review the rule, we assume that seventy-five percent (75%) of
the affected entities will proactively review this proposed rule. We
acknowledge that this assumption may understate or overstate the costs
of reviewing this rule. It is possible that not all of those affected
entities will read this proposed rule, or that there may be more than
one individual reviewing the rule for some of the affected entities.
For these reasons we thought that 75 percent of affected entities would
be a fair estimate of the number of reviewers of this rule. We welcome
any comments on the approach in estimating the number of entities which
will review this proposed rule. We also recognize that different types
of entities are in many cases affected by mutually exclusive sections
of some proposed rules, or that some entities may not find it necessary
to fully read each rule, and therefore for the purposes of our estimate
we assume that each reviewer reads approximately 50 percent of the
rule. We seek comments on this assumption.
Using the wage information from the Bureau of Labor Statistics
(BLS) for medical and health service managers (Code 11-9111), we
estimate that the cost of reviewing this rule is $90.16 per hour,
including overhead and fringe benefits https://www.bls.gov/oes/2015/may/naics4_621100.htm. Assuming an average reading speed, we estimate
that it would take 0.14 hours for the staff to review half of this
proposed rule. We previously estimated that there were 15,653 LTC
facilities (81 FR 68832). For each facility that reviews the rule, the
estimated cost is $12.62 (0.14 hours x $90.16). Therefore, we estimate
that the total cost of reviewing this regulation is $148,155 ($12.62 x
15,653*0.75).

[[Page 26653]]

F. Benefits of the Rule

The proposed revisions in this rule will maintain the requirements
in the 2016 final rule that provide for transparency in the arbitration
process for LTC residents. Specifically, we are proposing to maintain
that the agreement must be explained to the resident or his or her
representative in a form and manner they understand and that the
resident acknowledges that he or she understands the agreement. We are
also proposing to retain the requirement that the agreement must not
contain any language that prohibits or discourages the resident or
anyone else from communicating with federal, state, or local officials.
This proposed rule will also increase transparency by adding a
requirement that a facility must post a notice regarding its use of
agreements for binding arbitration in an area that is visible to
residents and visitors. With this increased transparency, we believe
that many stakeholder concerns regarding the fairness of arbitration in
LTC facilities will be addressed. We believe this proposal is
consistent with our approach to eliminating unnecessary burden on
providers, and supports the resident's right to make informed choices
about important aspects of his or her healthcare.

G. Alternatives Considered

As discussed above, the district court granted a preliminary
injunction against enforcement of the prohibition against pre-dispute
agreement for arbitration. The district court's opinion clearly
indicated that the court questioned CMS' authority to regulate
arbitration. We considered proposing to remove all of the arbitration
requirements and return to the position in the previous requirements,
that is, the requirements would be silent on arbitration. However, we
believe that transparency between LTC facilities and their residents in
the arbitration process is essential, and that CMS may properly
exercise its statutory authority to promote the health and safety of
LTC residents by requiring appropriate measures to ensure that LTC
residents receive adequate disclosures of their facility's arbitration
policies. Removing all of the provisions related to arbitration would
reduce transparency. Therefore, we have proposed retaining those
requirements that provide for transparency and adding that the facility
must post a notice regarding its use of arbitration in an area that is
visible to residents and visitors. We believe the requirements we are
proposing to retain, as well as the proposed revisions, will provide
sufficient transparency to protect residents and alleviate many of the
residents and advocates concerns about the arbitration process.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget. This
proposed rule is not expected to lead to an action subject to Executive
Order 13771 (82 FR 9339, February 3, 2017) because our estimates
indicate that its finalization would impose no more than de minimis
costs.

List of Subject in 42 CFR Part 483

Grant programs-health, Health facilities, Health professions,
Health records, Medicaid, Medicare, Nursing homes, Nutrition, Reporting
and recordkeeping requirements, Safety.

For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services proposes to amend 42 CFR chapter IV as set forth
below:

PART 483--REQUIREMENTS FOR STATES AND LONG TERM CARE FACILITIES

0
1. The authority citation for part 483 continues to read as follows:

Authority: Secs. 1102, 1128I, 1819, 1871 and 1919 of the Social
Security Act (42 U.S.C. 1302, 1320a-7, 1395i, 1395hh and 1396r).

0
2. Section 483.70 is amended by revising paragraph (n) to read as
follows:

Sec. 483.70 Administration.

* * * * *
(n) Binding arbitration agreements. If a facility chooses to ask a
resident or his or her representative to enter into an agreement for
binding arbitration, the facility must comply with all of the
requirements in this section.
(1) The facility must ensure that:
(i) The agreement for binding arbitration is in plain language. If
an agreement for binding arbitration is a condition of admission, it
must be included in plain language in the admission contract;
(ii) The agreement is explained to the resident and his or her
representative in a form and manner that he or she understands,
including in a language the resident and his or her representative
understands; and
(iii) The resident acknowledges that he or she understands the
agreement.
(2) The agreement must not contain any language that prohibits or
discourages the resident or anyone else from communicating with
federal, state, or local officials, including but not limited to,
federal and state surveyors, other federal or state health department
employees, and representatives of the Office of the State Long-Term
Care Ombudsman, in accordance with Sec. 483.10(k).
(3) When the facility and a resident resolve a dispute through
arbitration, a copy of the signed agreement for binding arbitration 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.
(4) A notice regarding the use of agreements for binding
arbitration must be posted in an area that is visible to residents and
visitors.
* * * * *

Dated: May 2, 2017.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
Dated: May 4, 2017.
Thomas E. Price,
Secretary, Department of Health and Human Services.
[FR Doc. 2017-11883 Filed 6-5-17; 4:15 pm]
BILLING CODE 4120-01-P

26650 Federal Register / Vol. 82, No. 109 / Thursday, June 8, 2017 / Proposed Rules

instructions on that Web site to view from communicating with federal, state, Enrollment-and-Certification/
public comments. or local officials, including but not SurveyCertificationGenInfo/Downloads/
Comments received timely will also limited to, federal and state surveyors, Survey-and-Cert-Letter-17-12.pdf).
be available for public inspection as other federal and state health The district court held that the
they are received, generally beginning department employees, and plaintiffs were likely to prevail in their
approximately 3 weeks after publication representatives of the Office of the State challenge to the 2016 final rule. It
of a document, at the headquarters of Long-Term Care Ombudsman, in concluded that it would likely hold that
the Centers for Medicare & Medicaid accordance with § 483.10(k). In the rule’s prohibition against LTC
Services, 7500 Security Boulevard, addition, when a LTC facility and a facilities entering into pre-dispute
Baltimore, Maryland 21244, Monday resident resolved a dispute through arbitration agreements was in conflict
through Friday of each week from 8:30 arbitration, a copy of the signed with the Federal Arbitration Act (FAA),
a.m. to 4 p.m. To schedule an agreement for binding arbitration and 9 U.S.C. 1 et seq. The court also
appointment to view public comments, the arbitrator’s final decision was reasoned that it was unlikely that CMS
phone 1–800–743–3951. required to be retained by the facility for could justify the rule, or could
5 years and be available for inspection overcome the FAA’s presumption in
I. Background
upon request by the CMS or its favor of arbitration, by relying on the
On October 4, 2016, we published in designee. agency’s general statutory authority
the Federal Register a final rule entitled We adopted the 2016 final rule after under the Medicare and Medicaid
‘‘Reform of Requirements for Long-Term considering a wide range of comments statutes to establish rights for residents
Care Facilities’’ (81 FR 68688) (2016 from diverse array of individuals and (sections 1891(c)(1)(A)(xi) and
final rule). The 2016 final rule amended organizations. For example, we noted 1919(c)(1)(A)(xi) of the Act) or to
42 CFR 483.70(n) to prohibit long-term that: promulgate rules to protect the health,
care (LTC) facilities from entering into safety and well-being of residents in
pre-dispute arbitration agreements with Many commenters argued that arbitration
was beneficial for residents and their families
LTC facilities (sections 1819(d)(4)(B)
any resident or his or her representative and 1919(d)(4)(B) of the Act).
as well as facilities. Disputes could be
or requiring that a resident sign an resolved more quickly and with less We have determined that further
arbitration agreement as a condition of animosity and expense than litigation. Some analysis is warranted before any rule
admission to the LTC facility. Prior to commenters also argued that prohibiting takes effect. We believe that a policy
the 2016 final rule, the Requirements for these agreements would only benefit lawyers, change regarding pre-dispute arbitration
Long-Term Care Facilities were silent on result in protracted litigation, increased costs will achieve a better balance between
any arbitration requirements. However, to the facilities, and increase the burden on the advantages and disadvantages of
the Centers for Medicare & Medicaid an already overwhelmed court system. This pre-dispute arbitration for residents and
Services (CMS) did issue sub-regulatory would also result in resources for resident their providers. Additionally, we have
guidance that supported arbitration care being diverted for litigation. Other reviewed the ‘‘Requirements for Long-
between residents and their facilities. commenters argued that prohibiting
arbitration could be detrimental to residents.
Term Care Facilities,’’ consistent with
See Fairness in Nursing Home the January 30, 2017 Executive Order
Arbitration Act of 2008: Hearing on H.R. In response to these comments, we ‘‘Reducing Regulation and Controlling
6126 Before the Committee on the recognized unequivocally that ‘‘[t]here Regulatory Costs (E.O. 13771). We
Judiciary, 110th Cong. (2008) (letter are both advantages and disadvantages believe that a ban on pre-dispute
from Department of Health and Human associated with both pre-dispute arbitration agreements would likely
Services dated July 29, 2008 opposing arbitration agreements and arbitration impose unnecessary or excessive costs
the H.R. 6126 that would have made itself.’’ We weighed those advantages on providers. We invite comments on
pre-dispute mandatory arbitration and disadvantages when we reversed our revised approach.
agreements between long-term care existing policy through the adoption of
providers and residents unenforceable); the 2016 final rule. II. Provisions of the Proposed
and Binding Arbitration in Nursing On October 17, 2016, the American Regulations
Homes, Survey and Certification Letter Health Care Association and a group of We are proposing to revise the
dated January 9, 2003 (S&C–03–10). affiliated nursing homes filed a provisions related to pre-dispute
The 2016 final rule also requires that complaint in the United States District arbitration at § 483.70(n). Specifically,
an agreement for post-dispute binding Court for the Northern District of we propose to remove the requirement
arbitration must be entered into by the Mississippi seeking a preliminary and at § 483.70(n)(1) precluding facilities
resident voluntarily, that the parties permanent order enjoining agency from entering into pre-dispute
must agree on the selection of a neutral enforcement of the prohibition on pre- agreements for binding arbitration with
arbitrator, and that the arbitral venue dispute arbitration agreements any resident or resident’s representative,
must be convenient to both parties. regulation (§ 483.70(n)(1)). On which we do not believe strikes the best
Under the 2016 final rule, an arbitration November 7, 2016, thirty-four days after balance between the advantages and
agreement could be signed by another the issuance of the regulation disadvantages of pre-dispute arbitration.
individual only if allowed by the prohibiting pre-dispute arbitration For the same reason, we also propose
relevant state’s law, all of the other agreements, the district court removing the prohibition at
requirements in this section are met, preliminarily enjoined enforcement of § 483.70(n)(2)(iii) banning facilities from
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and that individual had no interest in that regulation. On December 9, 2016, requiring that residents sign arbitration
the facility. In addition, the rule stated we issued a nation-wide instruction to agreements as a condition of admission
that a resident’s right to remain at the State Survey Agency Directors, directing to a facility. And, we propose removing
facility could not be contingent upon them not to enforce the 2016 final rule’s the provisions at § 483.70(n)(2)(ii)
the resident or his or her representative prohibition of pre-dispute arbitration regarding the terms of arbitration
signing an arbitration agreement. The provisions during the period that the agreements.
arbitration agreement also could not court-ordered injunction remained in We would retain provisions that
contain any language that prohibited or effect (S&C: 17–12–NH) https:// protect the interests of LTC residents in
discouraged the resident or anyone else www.cms.gov/Medicare/Provider- situations where a facility chooses to

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26652 Federal Register / Vol. 82, No. 109 / Thursday, June 8, 2017 / Proposed Rules

outright prohibition of arbitration Comments must be received on/by entire rule would be between $10 and
agreements would significantly increase August 7, 2017. $15 million. Once the rule was
the cost of care, and would require implemented, improved surveys to
IV. Response to Comments
facilities to divert scarce resources from review the new requirements would
the care of their residents to the defense Because of the large number of public require an estimated $15 to $20 million
of expensive litigation. comments we normally receive on annually in federal costs. Any costs to
In short, upon reconsideration, we Federal Register documents, we are not federal government regarding arbitration
believe that a ban on pre-dispute able to acknowledge or respond to them requirements were accounted for in the
arbitration agreements is not the individually. We will consider all estimates set forth in the 2016 final rule.
appropriate policy for all residents. comments we receive by the date and We do not believe that these revisions
Residents or their representatives time specified in the DATES section of
would impose any additional costs.
should be able to make the decision to this preamble, and, when we proceed
sign a pre-dispute arbitration agreement with a subsequent document, we will E. Regulatory Review Costs
as long as there is transparency in the respond to the comments in the
arbitration process. Furthermore, we preamble to that document. If regulations impose administrative
believe this proposed rule is consistent costs on private entities, such as the
V. Regulatory Impact Statement time needed to read and interpret this
with the FAA. Therefore, we are
proposing to modify the 2016 final rule. A. Statement of Need proposed rule, we should estimate the
cost associated with regulatory review.
III. Collection of Information The district court’s decision in
granting the preliminary injunction Due to the uncertainty involved with
Requirements accurately quantifying the number of
against enforcement of the prohibition
Under the Paperwork Reduction Act on pre-dispute arbitration agreements entities that will review the rule, we
of 1995, we are required to provide 60- indicated that CMS would at a assume that seventy-five percent (75%)
day notice in the Federal Register and minimum face some substantial legal of the affected entities will proactively
solicit public comment before a hurdles from pursuing the arbitration review this proposed rule. We
collection of information requirement is policy set forth in the 2016 final rule. acknowledge that this assumption may
submitted to the Office of Management We have reviewed the provisions and understate or overstate the costs of
and Budget (OMB) for review and determined that the arbitration reviewing this rule. It is possible that
approval. In order to fairly evaluate requirements should be revised. We not all of those affected entities will
whether an information collection believe that the protections for residents read this proposed rule, or that there
should be approved by OMB, section that we are proposing in this rulemaking may be more than one individual
3506(c)(2)(A) of the Paperwork strike a better balance of competing reviewing the rule for some of the
Reduction Act of 1995 requires that we policy concerns. The revisions to these affected entities. For these reasons we
solicit comment on the following issues: requirements in this proposed rule will thought that 75 percent of affected
• The need for the information
increase transparency in LTC facilities entities would be a fair estimate of the
collection and its usefulness in carrying
that chose to use arbitration. number of reviewers of this rule. We
out the proper functions of our agency.
• The accuracy of our estimate of the B. Overall Impact welcome any comments on the
information collection burden. approach in estimating the number of
• The quality, utility, and clarity of Posting a Notice Regarding the Facility’s entities which will review this proposed
the information to be collected. Use of Arbitration Agreements rule. We also recognize that different
• Recommendations to minimize the We are proposing that LTC facilities types of entities are in many cases
information collection burden on the post a notice regarding the use of affected by mutually exclusive sections
affected public, including automated arbitration agreements in an area that is of some proposed rules, or that some
collection techniques. visible to residents and visitors. This entities may not find it necessary to
would require the facility to develop a fully read each rule, and therefore for
Omnibus Budget Reconciliation Act of
notice and post it in a conspicuous area. the purposes of our estimate we assume
1987 Waiver
We believe that notices concerning that each reviewer reads approximately
Ordinarily, we are required to facility practices are periodically 50 percent of the rule. We seek
estimate the public reporting burden for developed, reviewed, and updated as a comments on this assumption.
information collection requirements for standard business practice. We also
this regulation in accordance with Using the wage information from the
believe that facilities that are already Bureau of Labor Statistics (BLS) for
chapter 35 of title 44, United States using arbitration agreements post some
Code. However, sections 4204(b) and medical and health service managers
type of notice. Thus, there is no burden (Code 11–9111), we estimate that the
4214(d) of the Omnibus Budget associated with the posting of this
Reconciliation Act of 1987, Public Law cost of reviewing this rule is $90.16 per
notice. hour, including overhead and fringe
100–204 (OBRA ’87) provide for a
waiver of Paperwork Reduction Act C. Summary of Impacts benefits https://www.bls.gov/oes/2015/
(PRA) requirements for this regulation. As discussed above, we believe that may/naics4_621100.htm. Assuming an
Thus, we have not provided an estimate average reading speed, we estimate that
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developing and posting a notice
for any paperwork burden related to regarding a facility’s practices is it would take 0.14 hours for the staff to
these proposed revisions and additions. standard business practice. Thus, we review half of this proposed rule. We
If you comment on this information have not estimated a cost for those previously estimated that there were
collection, that is, reporting, activities. 15,653 LTC facilities (81 FR 68832). For
recordkeeping or third-party disclosure each facility that reviews the rule, the
requirements, please submit your D. Cost to the Federal Government estimated cost is $12.62 (0.14 hours ×
comments electronically as specified in In the 2016 final rule (81 FR 68688 $90.16). Therefore, we estimate that the
the ADDRESSES section of this proposed and 68844), we anticipated that the total cost of reviewing this regulation is
rule. initial federal start-up costs for the $148,155 ($12.62 × 15,653*0.75).

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Document Created: 2018-11-14 10:06:18
Document Modified: 2018-11-14 10:06:18

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Proposed Rules
Action		Proposed rule.
Dates		To be assured consideration, comments must be received at one of
Contact		LTC Regulations Team: Diane Corning, Sheila Blackstock or Lisa Parker at (410) 786-6633.
FR Citation		82 FR 26649
RIN Number		0938-AT18
CFR Associated		Grant Programs-Health; Health Facilities; Health Professions; Health Records; Medicaid; Medicare; Nursing Homes; Nutrition; Reporting and Recordkeeping Requirements and Safety

82 FR 26649 - Medicare and Medicaid Programs; Revision of Requirements for Long-Term Care Facilities: Arbitration Agreements

DEPARTMENT OF HEALTH AND HUMAN SERVICESCenters for Medicare & Medicaid Services

Federal Register Volume 82, Issue 109 (June 8, 2017)

DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services