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 CMS Delays Phase 2 Enforcement Penalties to 2018

In a win for the provider community, skilled nursing care centers will not be subject to enforcement penalties from the implementation of specified Phase 2 survey guidelines starting later this year, the Centers for Medicare & Medicaid Services (CMS) said.

Instead, the agency said while the requirement to be in compliance with Phase 2 rules will not change from a Nov. 28, 2017, deadline, civil monetary penalties, denial of payment, or termination will not be used until a year later. Long term/post-acute care (LT/PAC) sources said the Phase 2 penalty delay is part and parcel of a larger pending effort to gain regulatory relief for providers from proposed new Requirements of Participation (RoPs) in the 2018 Skilled Nursing Facility Prospective Payment System (SNF PPS) draft rule.

This initial decision by CMS is good news, these sources say, if CMS moves forward with fully implementing the RoPs as finalized last fall.

In taking the Phase 2 action, CMS said it understood LT/PAC provider complaints that more time is needed to make certain facilities could meet the new survey standards without the threat of an enforcement action hanging over their heads.

“We will not utilize civil monetary penalties, denial of payment, and/or termination should a facility be found to be out of compliance with these new requirements beginning in November of 2017,” the CMS memo said. The year-long delay will be used to educate providers on Phase 2 details and possibly to issue correction plans or additional directed in-service training.

“Enforcement for other existing standards (including Phase 1 requirements) would follow the standard process,” CMS said.

At issue are revised new Medicare and Medicaid requirements for participation for LT/PAC facilities that CMS released on Sept. 28, 2016, with the first phase becoming effective on Nov. 28 of last year. Phase 2 and 3 will come into effect on Nov. 28 of this year and on Nov. 28, 2019, respectively. The new CMS mandates include the minimum health and safety standards that LT/PAC facilities must meet in order to participate in Medicare and Medicaid.

In the same communication, the agency said it would also keep the Nursing Home Five Star Quality Rating system health inspection score for any facility in place for one year for surveys conducted after Nov. 28.

“CMS has done this previously where the star ratings are maintained for a period of time as new requirements are phased in. To address the concern that serious quality concerns will not be known, CMS will separately flag those nursing facilities to ensure public transparency,” the memo said.

In addition, the agency released an update to guidance for Appendices P and PP in the State Operations Manual and a revised list of SNF F-Tags under each regulatory group and a crosswalk of old tags to new tags.

CMS said it would conduct a Medicare Learning Network call on July 25 to discuss the survey process as part of a broader education effort to run from July to October. That information is contained in the CMS memo as well at

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