New monetary penalty reg threatens nursing homes

Late last week, the Health Care Financing Administration unveiled a wicked weapon against nursing homes that experts say could jeopardize patients’ health and safety. In the March 18 Federal Register, the agency announced a regulation that allows it to impose Civil Monetary Penalties (CMPs) of up to $10,000 for each serious incident of fraud or abuse that it finds.

CMPs have become the government’s tool of choice for enforcing laws such as the anti-kickback statute. They’re administrative penalties that, unlike a False Claims Act suit, don’t require the Office of the Inspector General or HCFA to convince a federal prosecutor to file a court case. That makes them quicker and cheaper for regulators to impose, which has sparked worries that CMPs will rain down on providers.

The new penalties will be levied per each incident, and will be in addition to the current system of imposing fines based on the number of days that the facility was out of compliance. The value of the CMP will be based on the severity of the incident (particularly if a resident was harmed), the facility’s culpability, and its history of prior offenses. While nursing homes can dispute the penalty in an administrative court, "regulators do not have to wait until a violation is fixed to assess a penalty," asserts a HCFA statement. "In addition, nursing homes will not have an opportunity to avoid such fines by fixing the violations that led to their imposition." The regulation takes effect May 17; HCFA is accepting public comments until that date.

In addition to per-incident fines, HCFA says it’s also considering imposing CMPs based on the number of days of non-compliance. Unlike the current per-day penalties, surveyors would not have to determine the exact date on which the facility returned to compliance before calculating a fine. So, for example, surveyors who found a nursing home out of compliance during inspections on June 1 and July 1 could automatically impose a 30-day CMP at a stiff $3,000 to $10,000 per day. HCFA says its goal is to cut down on the number of visits surveyors must make to assess penalties.

Penalties based on the number of serious incidents could be more costly than fines that are based on the number of days of non-compliance, says Scott Parkin, spokesman for the American Association for Services and Homes for the Aging, in Washington, DC. Parkin also questions whether beefing up penalties will strengthen patient care, or just suck up money that nursing homes could use to improve their services. "The idea of slapping their wrists may not be the most efficient way," he adds.

Regardless of the penalty, what is most important is how aggressively the penalties are used, says Mike Mustokoff, a Philadelphia attorney who has represented nursing homes in several False Claims Act suits. How nursing homes will fare depends, for example, on how stringently HCFA defines an incident of serious patient abuse.

Regardless of what HCFA does, the "lion’s share" of nursing home enforcement will continue to be done by states, notes Mustokoff. And on top of fines, the regulation also imposes tougher state inspections, a move that HCFA attributes to lackadaisical enforcement in some states. Current regs mandate that complaints involving immediate jeopardy to patients be investigated within two days, and all other complaints "in a timely manner." Now, the time limit is 10 working days to investigate all complaints. HCFA Administrator Nancy-Ann DeParle promises to impose minimum federal standards for state investigations as well as tighter federal monitoring of state performance.

Industry experts say they’re still studying the regulation, a final rule that will take affect later this year. But some eyebrows have lifted at the fact that HCFA unveiled the regulation the day before the release of a new GAO report on HCFA and nursing homes. "I don’t know, but it sounds like a really good coincidence," laughed one Congressional staffer familiar with the nursing home issue. GAO found that the majority of HCFA sanctions were never imposed. The result is a ping-pong game where nursing homes under a threat by HCFA correct deficiencies, HCFA then withdraws the sanctions, and the facilities backslide to their old ways. Beside fines and tighter state enforcement, other planks of HCFA’s new nursing home platform include:

- Making public results of state inspections on a Web site called Nursing Home Compare at Nursing homes already have to make the results known to residents who request them, but the Web site will contain, "the most recent information from state inspections of every Medicare- and Medicaid-certified nursing home in a consumer-friendly format, as well as location, size, and ownership," according to HCFA. However, Parkin says this is nothing new because the site has been up for months.

- Launching new public awareness campaign to teach residents, their families, and those who work with residents how to spot neglect and abuse.