Legal blog: CMS’ revision of sprinkler enforcement

Imagine that you are the owner/operator of a nursing facility, and the administrator and director of nursing inform you that the facility was just cited with a deficiency because it is not fully sprinklered. If you do not achieve substantial compliance within 90 days, the Centers for Medicare & Medicaid Services (CMS) will impose a mandatory denial of payment for new admissions (DPNA). If the deficiency remains for six months, CMS will terminate your facility’s participation in the Medicare program. Add to those daunting prospects the fact that CMS may impose additional enforcement actions as a result of not having an automatic sprinkler system. What do you do?

What follows is the result of how one attorney counseled a client in that situation. Counsel recommended a conference call with the CMS central office to explore the possibility of CMS changing its policy based on valid considerations. And CMS agreed to do just that.

Nov. 15, CMS revised its prior guidance regarding enforcement actions based on a skilled nursing facility’s (SNF's) failure to meet the Aug. 13, 2013, deadline for installation of an automatic sprinkler system. (In August 2008, CMS published a final rule that required long-term care facilities to install automatic sprinkler systems in all resident areas by Aug. 13, 2013.) That final rule gave SNFs five years to complete the installation process.

CMS published a proposed rule on Feb. 7, 2013, that would have extended the Aug. 13, 2013, deadline for up to two years under certain narrowly defined circumstances, with the possibility of an additional one-year extension. However, the proposed rule has not been finalized. Thus, CMS lacks the authority to grant an extension to the Aug. 13, 2013, deadline.

Aug. 16, 2013, just days after the deadline for SNFs to be fully sprinklered, CMS published a survey and certification memorandum directing the heads of all state survey agencies (typically, a state’s department of health) to cite any facility not fully sprinklered with a deficiency at a scope and severity level of D, E or F, “at a minimum,” noting that a C-level deficiency is “not appropriate, since the failure to have a complete automatic sprinkler system in place as of [Aug. 13, 2013], constitutes noncompliance.”  The Aug. 16 memorandum noted that no extensions would be granted for facilities not fully sprinklered.

Until last week, if a facility was found not to be fully sprinklered, it would have ended up with at least a D-level deficiency. By definition, a D-level deficiency represents noncompliance with the federal requirements for participation in the Medicare program. As noted above, the regulations require that CMS impose a mandatory DPNA where noncompliance exists for 90 days. The DPNA cannot be waived. More troubling, where a facility fails to regain substantial compliance within 180 days from the determination of noncompliance, a mandatory termination from the Medicare program will result. Like the DPNA noted above, even the secretary of the U.S. Department of Health and Human Services lacks the discretion to waive the termination.

Because approximately 928 nursing facilities are not fully sprinklered to date, the potential for mandatory enforcement actions is real. CMS regional offices already have sent notices imposing enforcement actions for those facilities they determined lacked a fully automatic sprinklering system, and it would be futile for a facility to file an appeal of CMS’ enforcement actions. Such an appeal has no chance of prevailing and would be a waste of time, money and resources, accomplishing nothing in return.

But as last week’s revision to CMS’ policy illustrates, times exist when a constructive dialogue, attempting to structure a win-win outcome, is more appropriate than litigating, especially when no chance of prevailing in a legal battle exists.

The Nov. 15, 2013, revision to CMS’ earlier policy statement reflects an understanding by CMS that many quality facilities rendering excellent care to their residents were not able to meet the Aug. 13, 2013, deadline. Because CMS lacks the authority to grant an extension of the deadline, it agreed that where circumstances permit, it will allow a facility lacking a fully automatic sprinkler system to be cited at a C-level deficiency. A deficiency at a C-level represents “the potential for minimal harm,” a level that is outside CMS’ authority to impose an enforcement action.

The memo also recognized that “unique factors” may apply for a facility in the process of installing sprinkler systems. It stated that “in rare cases CMS may find that the demonstrated application of such extraordinary protections, together with only a short exposure period of time before a full sprinkler status is achieved, has so reduced the fire injury risk that no more than a potential for minimal harm remains (i.e., a ‘C’ level scope and severity).”

CMS provides a list of the “extraordinary protections” that it requires before it will consider allowing a C-level deficiency:

1. A 24-hour fire watch must be enacted.
2. Fire watch staffing information must be posted.
3. The building must be constructed of material with a fire resistance rating of at least 2 hours.
4. The facility must be in compliance with the requirements for smoke alarms, and fire extinguishers must be available in common areas on each residential floor unless determined to be contraindicated by the medical director.
5. The facility must conduct fire drills on each shift at least monthly.
6. The facility must conduct monthly fire safety training of all staff who work in unsprinklered areas.
7. Direct-care staffing must be increased on each floor in all unsprinklered areas.
8. Monthly fire inspections must be performed by the local fire marshall’s office or another independent and qualified inspection service.
9. The state survey agency must maintains onsite monitoring, unless CMS determines it is not needed.
10. The construction of the automatic sprinkler system has begun, or all necessary permits have been filed and the installation will be completed within six months, or all residents are removed from the portion of the building without an automatic sprinkler system.

A request for reevaluation of the scope and severity ratings based on the factors noted above must be sent to the appropriate CMS regional office, along with all appropriate documentation. Providers who believe they qualify for a downgrading of a scope and severity to a C-level must also send a copy of all documents to their respective state survey agency.

The CMS Survey and Certification memo is available at https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/SurveyCertificationGenInfo/Downloads/Survey-and-Cert-Letter-13-55.pdf.

Alan C. Horowitz, Esq., is of counsel at Arnall Golden Gregory. He is a former assistant regional counsel, Office of the General Counsel, U.S. Department of Health and Human Services. As counsel to CMS, he was involved with hundreds of enforcement actions and successfully handled appeals before administrative law judges, the board and in federal court. He also has clinical healthcare experience as a registered respiratory therapist and registered nurse. He can be reached at alan.horowitz@agg.com.

Alan C. Horowitz

Alan C. Horowitz, Esq., is a partner at Arnall Golden Gregory LLP, where he focuses his legal practice on regulatory compliance for skilled nursing homes, hospices and home health agencies and manages cases where the Centers for Medicare and Medicaid Services (CMS) has imposed an enforcement action. He is a former assistant regional counsel Office of the General Counsel, U.S. Department of Health and Human Services. As counsel to CMS, he was involved with hundreds of enforcement actions and successfully handled appeals before administrative law judges, the HHS Departmental Appeal Board and in federal court. He also has clinical healthcare experience as a registered respiratory therapist and registered nurse. He can be reached at alan.horowitz@agg.com.