CMS Proposes to Dramatically Increase Amount of Civil Monetary Penalties Imposed During Nursing Home Surveys

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With Nursing Homes Still Struggling to Rebuild After the COVID-19 Pandemic, is This Advisable?

When The Centers for Medicare and Medicaid Services (CMS) posted the PPS and Consolidated Billing Updates for Skilled Nursing Facilities (SNF) for fiscal year 2025 on April 4, 2024, in addition to a 4.1% rate increase of SNF PPS rates, it announced an intent to dramatically expand its authority to impose Civil Monetary Penalties (CMPs) during nursing home surveys.[i]  CMS states the increase in the CMPs are needed “to enhance the safety and quality of care provided in the nation’s nursing homes.” But, in reality, the existing penalties can currently be draconian in nature when imposed. and the expansion of the amounts and types of CMPs envisioned by CMS may drive some SNFs out of business.

The CMPs are imposed for certain levels of deficiencies during nursing home surveys by CMS.  The CMPs consist of “Per Day” CMPs that are imposed as a daily fine starting from when the non-compliance (deficiency) began until it is corrected.  “Per Instance” CMPs are imposed as one fine for the deficiency in question. 

Currently, the CMPs that may be imposed by CMS during a survey fit into three categories:

Per Day and Per Instance penalties currently may not be imposed during the same survey, and Per Instance penalties may not be imposed concurrently for the same deficiency.[iii]  Per Day penalties may only go back to the last standard survey (survey agencies are supposed to conduct a standard survey for each SNF every 15 months).[iv]   

CMS’s proposal would expand the use of CMP penalties, allowing more and/or overlapping Per Instance and Per Day CMPs to be imposed:

• The proposals will permit both types of penalties to be imposed (Per Day and Per Instance) at same time on the same survey
• A Per Day and Per Instance CMP or both could be imposed for each instance of noncompliance within the same survey
• Per Day penalties could be imposed as far back as last three standard surveys (versus last one)

As an illustration, a SNF might have a Category 2 incident and, for one of the deficiencies cited in the survey, currently CMS can impose a Per Day or Per Instance penalty but not both.  A Per Day Instance CMP could be up to $25,847.  The largest Per Day penalty could be as much $3,488,400 if a Per Day CMP is imposed[v] (if the date of non-compliance extends back that far) because survey agencies are supposed to conduct a standard survey for each SNF every 15 months.[vi]  

Under CMS’ proposal, the same deficiency could involve both a Per Day of up to $25,847 and a Per Day CMP of three times $3,488,400 - $10,465,200 - if the proposal is enacted (three times 15 months instead of 15 months). 

The possibility of overlapping and extended time frames for imposing penalties presented by CMS’ appears unnecessary given the current CMP amounts available to impose.[vii]  Any SNF facing a Per Day CMP knows it can easily range in the hundreds of thousands of dollars, if not the max of $3,488,400, even with the 15 month limitation.

A recent survey by the AHCA/NCAL found that SNFs across the nation are struggling.[viii]  The survey was focusing on the staffing challenges faced by SNFs, and due to the challenges, 45% of facilities are operating at a loss or negative total margin, 56% are struggling with occupancy, and 45% of facilities are operating at a loss or negative total margin, among the findings.[ix] Increasing the number and amount of CMPs available to impose on nursing homes – when adequate remedies are already available – may force nursing homes to close if faced with draconian CMP fines.

If you are concerned about the planned increase in CMPs, the regulation is still in proposed form and you can submit comments to CMS about your concerns until 5/28/24.

If you need assistance with navigating nursing home surveys or another other long term care or post-acute care issue, please reach out to Maynard Nexsen for assistance. 

_{[i] CMS Fact Sheet at https://www.cms.gov/newsroom/fact-sheets/fy-25-skilled-nursing-facility-prospective-payment-system-proposed-rule-cms-1802-p; Proposed federal regulation at: https://www.federalregister.gov/documents/2024/04/03/2024-06812/medicare-program-prospective-payment-system-and-consolidated-billing-for-skilled-nursing-facilities
[ii] 42 C.F.R. 488.488; https://www.cms.gov/files/document/ltc-hha-clia-hospice-specific-cmp-adjustments-2023.pdf.
[iii] CMS Fact Sheet
[iv] 42. C.F.R. 488.308(a).
[v] 15-month x 30 days = 450.  450 x $7,752 = $3,488,400.
[vi] 42. C.F.R. 488.308(a).
[vii] https://projects.propublica.org/nursing-homes/summary
[viii] https://www.ahcancal.org/News-and-Communications/Press-Releases/Pages/State-Of-The-Sector-Nursing-Home-Staffing-Shortages-Persist-Despite-Unprecedented-Efforts-To-Attract-More-Staff-.aspx
[ix] Id.}