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 Arbitration Debate Heats Up as Senators Weigh in on CMS Policy Change

The battle over a June proposal by the Centers for Medicare & Medicaid Services (CMS) to allow pre-dispute binding arbitration agreements in skilled nursing facility contracts heated up right before the Aug. 7 deadline for submitting comments to the agency, when a group of 31 senators voiced their hopes that CMS ban such arrangements.

We are writing to oppose the CMS proposal to reverse course on a critical aspect of the agency’s recently finalized rule, Reform of Requirements for Long-Term Care Facilities [CMS-3260-P], which made a number of long overdue improvements to the requirements for long term care facilities and nursing homes participating in Medicare and Medicaid programs,” the letter to CMS Administrator Seema Verma said.

Specifically, the June plan released by the Trump administration would reverse an attempt by the Obama administration to prohibit long term care facilities’ use of pre-dispute, mandatory arbitration clauses in their resident admission agreements, the letter said. Signed by a large group of Democratic lawmakers, led by outspoken arbitration foe Sen. Al Franken (D-Minn.), the group said arbitration agreements “stack the deck against residents and their families.”

The views expressed by the 31 senators run counter to the long term and post-acute care (LT/PAC) profession’s view of how arbitration works. The American Health Care Association/National Center for Assisted Living (AHCA/NCAL) has said that pre-dispute arbitration language in contracting has long been used as a way to settle legal disputes between LT/PAC providers and their residents in a fair and deliberative way.

“Arbitration is a form of private dispute resolution that utilizes neutral, professional arbitrators in lieu of costly and timely litigation,” AHCA/NCAL said in a summary of the LT/PAC position. “Of the 3.4 million people treated in nursing facilities each year, significantly less than 1 percent have issues that are serious enough to require formal dispute resolution. The vast majority of these cases reach a settlement before going to court or entering arbitration.”

Indeed, when CMS published its June proposal, providers applauded the move, with AHCA/NCAL President and Chief Executive Officer Mark Parkinson saying, “The ban was an overreach, flying in the face of the Federal Arbitration Act and congressional intent.”

The CMS proposed rule to remove the prohibition on pre-dispute binding arbitration agreements would also require binding arbitration agreements to be in plain language. And, the draft rule said, if signing the agreement for binding arbitration is a condition of admission into a skilled nursing center, the language of the agreement and in the admissions contract must be in plain writing.

The ban had not actually ever been implemented because of a preliminary injunction ordered by a federal court in 2016 related to a lawsuit brought by AHCA/NCAL challenging the restriction on pre-dispute arbitration contracts. The U.S. Court of Appeals for the Fifth Circuit in New Orleans on June 2 issued an order dismissing a government motion filed in the waning days of the Obama administration to remove the preliminary injunction hearing in the case of AHCA v. Price.

Read the proposed CMS rule here:


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