Current Trends in Long Term Care Regulation, Licensure, and Enforcement

1. Current Trends in Long Term Care Regulation, Licensure, and Enforcement Presented by Michael F. Anderson, Esq. and Meredith N. Larson, Esq. Arent Fox LLP Washington, DC | New York, NY | Los Angeles, CA September 12, 2011

2. Introduction • Trends in Long Term Care • Demographic changes • How is the industry responding? • How do changes affect day-to-day operations? • What impact will the recent economic upheaval have on long term care in the future?

3. Trends in LTC: What is Driving Changes? • Changes in Population • The U.S is shifting from being predominantly young to predominantly older • In 2009, 12.8% of the population was over 65 • In 2050, this will be 20.2% • 70% of people over the age of 65 will require long term care at some point

4. Trends in LTC: What is Driving Changes? • Long Term Care and Chronic Disease • Increasing prevalence of chronic disease in the general population • Half of Americans suffer from at least one chronic disease • About a quarter of people with chronic disease have limitations on ADLs

5. Trends in Long Term Care: Front-End Issues • Legislative and Judicial Trends • Current trends in states • How judicial trends impact state regulation • Federal oversight

6. Trends in LTC: Reactions • Enforcement and Compliance • Trends in enforcement • Focus on Compliance

7. Trends in LTC: The Economy • Economic Uncertainty and LTC • Effect on consumers? • Effect on providers? • Effect on regulators?

8. State Legislative Trends • Regulating Dementia Units • In 2010, Oregon released new requirements for endorsement of Memory Care units in long term care facilities • In 2009, Georgia, Iowa, and New Mexico passed new regulations • Is increasing regulation of these units a trend?

9. State Legislative Trends • What do states do now? • Some do not regulate • HI, DC • Some require specific licenses • Ex: AL, AZ, MA, MT • Almost all require disclosures and training • Some only require disclosures or training • Some have physical plant requirements • Delayed egress • A few only regulate physical plant

10. State Legislative Trends • Related Trend: Levels of Care • Pennsylvania added a new level of care • Personal care and assisted living • Aging in place • Scope of care • Some states limit skilled care for AL residents • Care by AL vs. care by a third party • New: Rhode Island allows 45 days of skilled care in AL

11. State Legislative Trends • Other Continuing Trends • States continue to add disclosure requirements • Fees and how to contest increases (ID) • Medicaid policy (WA) • State survey to be conspicuously available (SC) • Background checks • Increased or changed in FL, TX, and WA • Life Safety updates • CA, CO, FL, TX, OK, OR, TX

12. State Legislative Trends • Enforcement Powers • Several states have expanded enforcement powers • KY has defined new penalties for facilities receiving more than two violations in six months • MS has authorized closure of facilities to protect health and safety • SC has specified when the most severe penalties to licensure apply

13. Judicial Trends • Issues in the Courts: Arbitration Agreements • What is an arbitration agreement? • Most states regulate resident agreements • Courts also regulate • Facilities can be pulled in different directions

14. Judicial Trends • Arbitration Agreements: Types of Disputes • Three different areas have been litigated • When is a binding agreement to arbitrate created? • What happens when state and federal law about arbitration agreements conflict? • When is an otherwise-valid arbitration agreement not enforceable?

15. Judicial Trends • Arbitration Agreements: Enforceability • When can a resident bind him or herself? • Gilmore v. Life Care Centers of America (Florida, 2010): a resident with mental capacity issues cannot sign an arbitration agreement • When can a family member bind a resident? • When the family member has power of attorney? • Yes • Some courts: when the family member has apparent or implied authority • When the family member has power of attorney for health care decisions only? • Generally no • A health care power of attorney is limited to health care decisions

16. Judicial Trends • When State and Federal Laws Conflict • The Federal Arbitration Act says that arbitration agreements should be generally held to be enforceable • Some state laws ban arbitration clauses in nursing home admissions agreements • What happens when a facility tries to enforce an arbitration agreement in a state that doesn’t allow them in admission agreements?

17. Judicial Trends • When State and Federal Laws Conflict • Courts are divided on whether to enforce state laws • Courts in Illinois and Tennessee have held that state laws protect the right to sue in court • Another Illinois court has held that federal law applies, as have courts in Mississippi, Georgia, and Alabama

18. Judicial Trends • Arbitration Agreements: Enforceability • Some courts have refused to enforce arbitration agreements on the grounds that they are “unconscionable” or “void as against public policy” • WV court: federal, not state, arbitration law applies, but agreement is unenforceable • These are rarely used legal doctrines

19. Judicial Trends • Negotiated Risk Agreements • “Panelists agreed that using negotiated risk agreements with residents and their families didn’t mean it was a waiver of liability for all providers. Virtually all the panelists agreed that negotiated risk agreements are not a pressing public issue.”

20. Federal Oversight • Is federal oversight of assisted living coming? • Consumer groups have called for this for a long time • In current discussions, linked to Medicaid

21. Federal Oversight • Home and Community Based Waivers • The Affordable Care Act provides incentives to states to increase waiver use • CMS has issued regulations that would place certain requirements on AL facilities taking Medicaid • Patients must have a lease rather than a residency agreement • Requires aging in place • Private sleeping, cooking, and bathing • Compliance with person-centered plan may not be a condition of lease • Problems with oversight?

22. Federal Oversight • The CLASS Act • Another part of the ACA • Uncertain future: on the budgetary chopping block • If it stays, it would be a voluntary LTC insurance program • Regulations scheduled to be released in 2012; delayed at least a year • Impact?

23. Enforcement and Compliance • Trends in Enforcement • States have increased power to enforce • Well-publicized incidents lead to greater focus on enforcement • Miami Herald series on negligence in assisted living facilities • Changes to federal law

24. Enforcement and Compliance • Direct Enforcement Tools • Fines • Suspension of License • Framingham, Mass: http://www.metrowestdailynews.com/news/x1510865645/State-suspends-certification-of-Framingham-assisted-living-facility • Las Vegas, NV: http://www.lasvegassun.com/news/2011/aug/26/state-closes-las-vegas-nursing-home-after-reports-/ • Revocation of License • Miami, FL : http://www.heraldtribune.com/article/20110829/ARTICLE/110829523

25. Enforcement and Compliance • Indirect Enforcement Tools • Criminal Prosecution • Pennsylvania: http://www.phillyburbs.com/my_town/yardley/eldercare-worker-pleads-guilty-to-assaulting-alzheimer-s-patient/article_2c963fef-8d91-5f7f-8337-1874d4aeb00b.html • The False Claims Act • Applies where state or federal funds are used • Allows private individual to initiate enforcement action • State or federal government can join the action

26. Enforcement and Compliance • Why a Compliance Plan? • Federal government mandates for some providers; states mandate for others • Avoid potential tags on surveys • Allow providers to decrease risk and improve resident satisfaction

27. Enforcement and Compliance • Providers: Focus on Compliance • Elements of a Compliance Program: OIG • Compliance Officer • Communication • Education and Training • Auditing and Monitoring • Discipline and Corrective Action • Policies and Procedures • States also offer guidance: New York • Requires mandatory compliance program for all Medicaid providers • http://www.omig.ny.gov/data/images/stories/compliance_alerts/compliance_alert_2011-05.pdf

28. Economic Trends • Long Term Care and The Great Recession • Baby boomers have lost retirement savings • Housing market means its harder to sell before a move into a facility • What impact now? What impact in the future?

29. Economic Trends • The Great Recession: Consumers • Delayed retirement • Greater reliance on Medicaid?

30. Economic Trends • The Great Recession: Providers • New construction: Boom or bust? • Greater reliance on fewer deals • Increases reliance on regulators to aid in processing CHOWs

31. Economic Trends • The Great Recession: Regulators • Regulation is increasing • But funding is reduced in down economy • Regulators must do more with less

32. Conclusion • Looking to the future