On Monday August 24, 2020, the Centers for Medicare & Medicaid Services (“CMS”) released a Medicaid Informational Bulletin (the “CIB”) identifying and encouraging the use of payment flexibility available to states to increase Medicaid reimbursement for nursing homes that implement certain infection control practices. The CIB is the latest in CMS’s continued focus on safeguarding nursing home residents from the ongoing COVID-19 public health emergency.

In March 2020, CMS created a streamlined Medicaid Disaster Relief State Plan Amendment (“SPA”) template, which states have since used to implement temporary changes to eligibility, enrollment, benefits, premiums, cost-sharing, and provider payments in response to the pandemic. One of the key abilities granted to states through these Medicaid Disaster Relief SPAs is the authority to increase nursing home payments.

States have significant flexibility to modify state plan payment rates and methodologies for nursing homes, which modifications are crucial for addressing increased labor costs and supply costs, such as for personal protective equipment. The flexibility also allows states to target payment increases to either facilities treating residents diagnosed with COVID-19 or facilities in areas experiencing a COVID-19 outbreak. CMS has prioritized the review and approval of such proposals, and has already approved numerous Medicaid Disaster Relief SPAs that provide for such payment increases.

CMS highlights five examples of nursing facility payment enhancements available to states:

  1. Per diem dollar increases or percentage increases to existing base rates;
  2. Establishment of new payment methodologies for nursing homes serving as isolation centers;
  3. Temporary modifications to existing rate setting methodologies, removing certain state plan-established payment penalties, or creating an option for facilities to apply for specialized payment adjustments under extraordinary circumstances;
  4. Creation of new targeted supplemental payments or modified existing supplemental payments to accelerate the timing of payments; and
  5. Modifications to state bed hold policies to adjust the maximum number of reimbursable leave-of-absence days or other policy limitations established in state plans, or to increase the payment rate for bed hold days.

In the context of Medicaid managed care, states can direct specific payments made by managed care plans to providers through a state-directed payment. Further, states may consider paying for services outside of the managed care capitation rates as a non-risk payment arrangement, which can be structured as either a separate non-risk contract with the managed care plans or as an amendment to existing managed care plan contracts to include a non-risk payment. The CIB highlights flexibilities implemented in the managed care context in Ohio, Michigan, and Iowa.

The CIB is just the latest in a series of efforts to promote infection control in nursing homes. On August 14, 2020, CMS announced via press release that it imposed more than $15 million in civil money penalties on more than 3,400 nursing homes during the pandemic due to noncompliance with infection control requirements and the failure to report COVID-19 data. In the press release, CMS Administrator Seema Verma reiterated the agency’s focus on infection control, stating “the Trump Administration is taking aggressive enforcement action against Medicare and Medicaid certified nursing homes that fail to implement proper infection control practices.”

Since March 4, 2020, CMS has prioritized its inspection protocols to allow inspectors to focus on serious threats like infectious diseases and abuse. Since then, CMS and state survey agencies have completed infection control surveys in over 15,276 (99.2%) of nursing homes, which have resulted in more than 180 immediate jeopardy level findings for infection control – triple the rate of such deficiencies found in 2019.[1] CMS has imposed nearly $10 million in civil money penalties for these violations, with an average civil money penalty of $55,000.[2]

Further, since June 1, 2020, CMS has increased enforcement for facilities with persistent infection control violations. Pursuant to such increased enforcement, nursing homes now face fines up to $5,000 when cited for lower level infection control deficiencies that were identified on a previous survey and up to $20,000 when cited for infection control deficiencies found twice or more in the last two years.

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[1] Immediate jeopardy represents a situation in which a nursing home’s noncompliance with CMS requirements of participation has caused or is likely to cause serious injury, serious harm, serious impairment, or death to a resident.

[2] CMS has also taken enforcement action against nursing homes for failure to report COVID-19 data, citing more than 3,300 deficiencies and imposing more than $5.5 million in civil money penalties.