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CMS Shifts Gears: Nursing Homes Can Still Require Binding Arbitration

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One of the final elder care policy moves of the Obama Administration will not be implemented after all, thanks to a ruling just announced by the Center for Medicare and Medicaid Services (also called CMS). The new regulation means that nursing homes can continue requiring residents to sign binding arbitration agreements as a condition of admission.

The change in regulation, which potentially affects thousands of nursing home residents, is described in this article on the website of Modern Health Care. Under President Obama, the CMS had been poised to change the law by making it illegal for nursing homes to insist on binding arbitration agreements, which make it impossible for residents and their families to take nursing home operators to court to resolve disputes. The Obama-era law had been part of a comprehensive overhaul in long term care regulations which was to have begun taking effect last November. Instead, while some of the law’s provisions remain intact, the rule which would have outlawed binding arbitration has been tossed.

As the Modern Health Care article explains, “Arbitration agreements prevent families who believe their loved ones received bad care at nursing homes from suing.” The article goes on to state that families often feel “pressured” to sign the contracts, and they don’t always understand precisely what they’re agreeing to. “The nursing home industry prefers arbitration,” says Modern Health Care, “since it offers a less costly alternative to lawsuits.” Nursing home operators say they fear the financial impact of expensive lawsuits.  “The cost of prolonged cases, along with falling reimbursement rates, could force some nursing homes to close, industry stakeholders say.”

It’s no wonder that the industry prefers binding arbitration. Not only do these agreements eliminate much of the risk of hyper-expensive lawsuits, they also limit liability even when the nursing home loses.  “(Residents) only find out later that awards through arbitration in nursing home cases are usually lower than those reached in court,” says the Modern Health Care piece.

As recently as last fall, the picture looked quite different – in fact, the industry was bracing for precisely the opposite outcome.  We found an article on Senior Housing News written in late September 2016 that the practice of requiring binding arbitration agreements was about to be outlawed. The ruling was going to apply to Medicare- and Medicaid-certified providers, along with assisted living providers and even private-pay providers whose practice was to insist their residents agree to arbitration and forego their right to sue. But the surprise of the November election and the resulting change of administration triggered a reversal of the rule with an outcome much more favorable to the nursing home industry.

According to the Modern Health News article, not all of the Obama-era rules changes are being rescinded. “The 700-page proposal contained several other revisions to long-term care provider regulations, many of which the Trump administration will preserve,” says the article. Nursing homes are required to fully explain the arbitration requirements both to the resident and to family members or other representative. Nothing in the agreement can prohibit or discourage the resident communicating with federal, state or local officials.  Also any arbitration agreement must be written in plain language, not legal jargon, and must be posted for residents and visitors to see.

Naturally the CMS put a positive consumer-friendly spin on this new rule change. In their statement the agency said, “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.” But here at AgingOptions we take a different view. Any ruling that restricts patient rights for the sole purpose of preserving industry profits fills us with concern. Frivolous lawsuits don’t help anybody, but requiring aggrieved residents and their families to submit to binding arbitration where the deck may be stacked against them and where any settlement is bound to be lower strikes us as a one-sided solution to the problem. It may be business-friendly, but it isn’t resident-friendly.

A better solution in our view is to avoid the problem altogether. By carefully planning your retirement well in advance using our powerful approach called a LifePlan, you’ll be able to keep from becoming a burden to your loved ones while you avoid being forced to move into a nursing home against your wishes. We’ll show you how to link your financial, medical and legal plans in such a way that you can protect your assets, so that you’ll have the resources you need to allow you to live where you want with the care that you require. If this sounds like the answer to your retirement needs, it is. Maybe it’s time to find out more about this planning breakthrough.

It’s easy to do: simply invest a few hours and attend a free LifePlanning Seminar near you. Bring your loved ones and get your retirement questions answered by Rajiv Nagaich, the Northwests’s premier elder care attorney and retirement planning expert. Click here for dates, times and online registration at an upcoming seminar, or contact us during the week and we’ll be happy to assist you.

(originally reported at

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