Reed Smith Client Alerts


On September 28, 2016, the Centers for Medicare & Medicaid Services (CMS) issued a final rule comprehensively updating and extensively revising the requirements for participation (ROPs) for long-term care (LTC) facilities participating in the Medicare and Medicaid programs (the Final Rule).1 As the first major update to the requirements for LTC facilities in 25 years, the Final Rule will have a dramatic impact on LTC facility operations and finances. The Final Rule adopts numerous changes to the existing ROPs proposed in the July 16, 2015 proposed rule,2 and also includes various revisions to the proposed rule, in particular, modifications to the staffing and training requirements, care planning rules, infection prevention and control program provisions, and the prohibition on facilities’ use of pre-dispute arbitration agreements. 

As an indication of the expected impact of the Final Rule and the differences from the proposed rule, CMS has increased its estimates of the total projected cost of implementation. CMS states that it expects complying with the ROPs to cost $831 million in the first year (up from $729 million), or an estimated $62,900 per facility (up from $46,491 per facility), and approximately $736 million annually in the second and subsequent years (up from $638 million), or $55,000 per facility (up from $40,685 per facility). The Final Rule’s projected costs are exceedingly conservative, especially for LTC facilities in certain parts of the country where, for example, hiring and retaining certain facility staff with the required qualifications may be challenging. The cost of compliance will also vary depending on the extent to which facilities already have adopted and implemented certain policies, procedures, and practices covering the requirements. The stakes for a facility’s noncompliance are high, as LTC facilities face penalties, denial of payment for new admissions, and possible termination from the Medicare and Medicare programs for failure to achieve substantial compliance with the onerous ROPs. 

CMS reports that it received nearly 10,000 public comments on the proposed rule. In response to comments regarding the cost and resources required to achieve compliance with these significant new requirements, CMS will phase-in implementation in three phases.  Phase One, which includes many of the health and safety requirements, must be implemented by the effective date of the regulations, November 28, 2016.  Phase Two and Phase Three require compliance by one year and three years, respectively, from the effective date of the Final Rule (i.e., November 28, 2017 and November 28, 2019), as discussed further below.

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Client Alert 2016-284