This month, The Centers for Medicare & Medicaid Services (CMS) issued proposed requirements for pre-dispute arbitration agreements commonly utilized by long-term care facilities. After CMS’ attempt to prohibit such contracts in October 2016, the revision aims to further regulate the practice and is applauded by care providers throughout the industry.
Arbitration clauses are frequently signed by residents during admission into a facility, and stipulate the use of a professional arbitrator to resolve potential disputes rather than traditional litigation. Because arbitration is often noted as a more efficient and cost-effective resolution tactic, care providers have long argued the benefits of this alternative – for both the resident and the provider.
One of the primary benefits of utilizing an arbitrator is increased efficiency, as it relates to both time and funds. When using arbitration, the American Bar Association reports that the average amount of time that elapses from the filing of a dispute to the issuance of an award is about seven months. In comparison, it takes an average of two years to resolve a claim through a lawsuit. Additionally, the added costs of pursuing a lawsuit – from attorney fees to court costs and more – means that funds are being taken away from the facilities and they cannot invest in initiatives that improve resident care. These costs also infringe on the money awarded to a resident and their family. According to reporting by The Wall Street Journal, if the plaintiff is granted an award, up to 45 percent of this must be paid to their representation.
In addition to the financial impact of a lawsuit, it can also significantly affect human capital and operations. When facilities are named as defendants in litigation, long-term care providers are pulled away from their residents and forced to spend countless hours reviewing paperwork and protocols, participating in depositions with lawyers and sitting through lengthy trials. By taking nurses away from their core duties and reducing staff at a given facility, the standard of care for all residents can be sacrificed.
And finally, in the event of a dispute, arbitration also helps to avoid any hostility that may arise during lawsuits between the long-term care institution and the resident and their family. By encouraging honest communication from the start of the relationship, families often feel more comfortable approaching administration about standards of care – as opposed to immediately contacting a lawyer. By immediately setting a collaborative tone and establishing an open line of communication, long-term care facilities can help pave the way for an amicable resolution that will benefit both parties. In the previously noted report, the American Bar Association found that in arbitration, the rate of voluntary compliance with an award exceeds 90 percent.
With this in mind, the CMS revision aims to ensure that long-term care facilities are clearly communicating the terms of the agreement with the resident and their family at the time of admittance. Not only is it important for facilities to be transparent about arbitration upon admission, but health care providers should be in constant contact with residents and their families throughout their time at the facility – not just if an accident or injury occurs. As pre-dispute arbitration regulations continue to evolve, health care executives should work closely with their insurance broker to ensure that their procedures are in compliance with the latest federal standards.
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