The Law Offices of Jennifer A. Stiller

Improving quality and regulatory compliance in nursing homes

By Jennifer A. Stiller
December 21, 2009
Revised March 23, 2010

Effective Compliance and Ethics Programs

Most healthcare providers are not required by current law to have broad-based compliance and ethics programs - although they are strongly encouraged.

Under Healthcare Reform, the HHS Secretary in consultation with the Office of Inspector General (OIG ) must adopt regulations requiring nursing homes (skilled nursing facilities (SNFs) and "nursing facilities") to have an effective compliance and ethics program. The regulations must be adopted by March 23, 2013.

Each facility's compliance and ethics program must be "reasonably designed, implemented, and enforced so that it generally will be effective in preventing and detecting criminal, civil, and administrative violations under federal law and in promoting quality of care."

The requirements HHS imposes in its new regulations may vary with the size of the organization that operates the facility, with larger entities being required to have "a more formal and rigorous program [that] include[s] established written policies defining the standards and procedures to be followed by its employees." ("Larger" organizations are defined as those that operate five or more facilities.) The statute also requires that such stricter standards must be applied to the corporate level management of multi-unit nursing home chains.

The compliance and ethics program must include the following elements:

  • The organization must have established compliance standards and procedures to be followed by its employees, contractors, and other agents that are reasonably capable of reducing the prospect of criminal, civil, and administrative violations.

  • Specific individuals within high-level personnel of the organization must have been assigned overall responsibility to oversee compliance with such standards and procedures and have sufficient resources and authority to assure such compliance.

  • The organization must have used due care not to delegate substantial discretionary authority to individuals whom the organization knew, or should have known through the exercise of due diligence, had a propensity to engage in criminal, civil, and administrative violations under the law.

  • The organization must have taken steps to communicate effectively its standards and procedures to all employees and other agents, such as by requiring participation in training programs or by disseminating publications that explain in a practical manner what is required.

  • The organization must have taken reasonable steps to achieve compliance with its standards, such as by utilizing monitoring and auditing systems reasonably designed to detect criminal, civil, and administrative violations by its employees and other agents and by having in place and publicizing a reporting system whereby employees and other agents could report violations by others within the organization without fear of retribution.

  • The standards must have been consistently enforced through appropriate disciplinary mechanisms, including, as appropriate, discipline of individuals responsible for the failure to detect an offense.

  • After an offense has been detected, the organization must have taken all reasonable steps to respond appropriately to the offense and to prevent further similar offenses, including repayment of any funds to which it was not entitled and any necessary modification to its program to prevent and detect criminal, civil, and administrative violations.

  • The organization must periodically undertake reassessment of its compliance program to identify changes necessary to reflect changes within the organization and its facilities.

Facilities must have a compliance and ethics program that conforms to the regulations in place by no later than March 23, 2013.

Three years after the compliance programs are put into place, HHS is required to evaluate the programs to determine the extent to which they have led to changes in deficiency citations and quality performance, and make a report to Congress.

Quality Assurance and Performance Improvement Program

Pre-existing law requires SNFs and nursing facilities to have a quality assessment and assurance committee ("Committee"), consisting of the director of nursing services, a physician, and at least 3 other members of the facility's staff, which (i) meets at least quarterly to identify issues with respect to which quality assessment and assurance activities are necessary and (ii) develops and implements appropriate plans of action to correct identified quality deficiencies.

Under the new law, HHS will establish and implement a quality assurance and performance improvement program ("QAPI program") for nursing facilities, including multi-facility chains, by Dec. 31, 2011. The program will establish standards and provide technical assistance to facilities on the development of best practices to meet them.

Within a year after the date on which the regulations for the QAPI program are adopted, facilities must submit a plan for how they intend to meet the standards and implement the best practices, and how they will coordinate doing so with the activities of the Committee.

Improved Handling of Complaints

Standardized form. HHS will develop a standardized complaint form, which the state survey agency must make available upon request to nursing home residents and people acting on their behalf, and to nursing home workers and their representatives. This form will be provided to those who wish to file a complaint with the State survey agency and/or the State long-term care ombudsman program. However, if the person filing the complaint does not use the standardized form (even if he makes an oral complaint), the complaint will still be attended to.

Objectives of complaint process. The State must establish a complaint resolution process which ensures that -

  • A person who has complained, in good faith, about the quality of care or other issues relating to the facility (a "good-faith complaint"), is not retaliated against;

  • A legal representative of a resident (or other responsible party) is not denied access to the resident or otherwise retaliated against if that person has made a good-faith complaint; and

  • These non-retaliation rules apply regardless of whether the complainant used the standardized form or some other method for submitting the complaint.

Required elements. The complaint resolution process must include -

  • Procedures to assure accurate tracking of complaints received, including notification to the complainant that a complaint has been received;

  • Procedures to determine the likely severity of a complaint and for the investigation of the complaint; and

  • In the House bill only, procedures to ensure that the identity of the complainant will be kept confidential.

The complaint resolution process must protect residents and their representatives from retaliation, but there is no specific right to sue and recover damages for violations.

These provisions are slated to go into effect by March 23, 2011.

Ensuring Staffing Accountability

After consulting with stakeholder groups, the HHS Secretary will require nursing homes to submit electronically direct care staffing information (including information with respect to agency and contract staff) based on payroll and other verifiable and auditable data in a uniform format.

The specifications for the uniform format must include requirements that the information provided-

  • Specify the category of work a certified employee performs (such as whether the employee is a registered nurse, licensed practical nurse, licensed vocational nurse, certified nursing assistant, therapist, or other medical personnel);

  • Include resident census data and information on resident case mix;

  • Include a regular reporting schedule; and

  • Include information on employee turnover and tenure and on the hours of care provided by each category of certified employees per resident per day.

Agency and contract staff data must be reported separately from information on employee staffing.

The reporting obligation will start starts no later than March 23, 2012.

National Independent Monitor Pilot Program

The new law directs the Secretary to a demonstration project whereby an independent monitor will be appointed for a two-year period (beginning March 23, 2011) to oversee interstate and large intrastate chains of skilled nursing facilities and nursing facilities. Participating chains will be chosen from among those that apply, based on criteria established by the Secretary "including where evidence suggests that one or more facilities of the chain are experiencing serious safety and quality of care problems.

Under contract with the Secretary, the monitor will:

  • Conduct periodic reviews and prepare root-cause quality and deficiency analyses of the chain to assess if facilities of the chain are in compliance with State and Federal laws and regulations;

  • Undertake sustained oversight of the chain, to involve the owners of the chain and their principal business partners in facilitating compliance by the chain's facilities;

  • Analyze the management structure, distribution of expenditures, and nurse staffing levels of facilities of the chain in relation to resident census, staff turnover rates, and tenure;

  • Report findings and recommendations with respect to such reviews, analyses, and oversight to the chain, its facilities, the Secretary and relevant States; and

  • Publish the results of such reviews, analyses and oversight.

The monitor will provide a preliminary report to the chain, which will have 10 days to respond with plan to implement monitor's recommendations or a statement as to why they will not. The chain's response is to be included in the final report.

The chain will pay part of the cost of the monitor; appropriations will pay the rest.

Notification of facility closure

If a nursing home plans to close, its administrator must submit written notification of the impending closure to the HHS Secretary, the State's long-term care ombudsman, facility residents, residents' representatives, and other responsible parties.

The notice must be provided at least 60 days prior to voluntary closure or, if closure is due to termination by the Secretary, by the date specified by the Secretary.

The administrator must ensure that the facility does not admit any new residents on or after the notification date, and the notice must include a plan for the transfer and adequate relocation of the residents of the facility by a specified date prior to closure that has been approved by the State, including assurances that the residents will be transferred to the most appropriate facility or other setting in terms of quality, services, and location, taking into consideration the needs and best interests of each resident.

The State must ensure that, before a facility closes, all residents of the facility have been successfully relocated to another facility or to an alternative home and community-based setting.

HHS is given the discretion to continue paying the facility to care for the residents between the notification date and the day each resident is successfully relocated.

These provisions are effective March 23, 2011. An administrator who fails to comply with the notice provisions will be fined a mandatory civil money penalty of up to $100,000. At the Secretary's discretion, he or she may also be excluded from participation in any Federal health care program.

Improved staff training

The new law adds to existing requirements for initial employee training, training in dementia management and resident abuse prevention. The Secretary is to determine if this should also be included in ongoing training requirements. Effective March 23, 2011.

Ending wasteful practices of prescription dispensing

In long-term care facilities, dispensing medications in the usual 30-day supply provided to other patients can create severe administrative problems and generate enormous waste. The healthcare reform law requires Medicare Part D prescription benefit plans and Medicare Advantage plans to establish utilization management techniques specified by the Secretary that will provide daily, weekly, or automated dose dispensing for enrollees who reside in long-term care facilities. Effective for drug plan years beginning January 1, 2012.

Reporting of expenditures

The new law requires skilled nursing facility cost report forms to be redesigned.

Five-Star Quality Rating System

The Comptroller General will conduct a study of CMS's Five-Star Quality Rating System for nursing homes, analyzing how the system is being implemented, whether any problems are associated with the system or its implementations, and how it could be improved. A report to Congress is due March 23, 2012.

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