The Consequences of Healthcare Noncompliance

In order to receive payments and remain certified under the Medicare and Medicaid programs all skilled nursing facilities (SNF’s) are required to undergo a health inspection in the form of an unannounced standard survey by a professional surveyor at least every 15 months, and if there are areas of noncompliance a revisit survey or extended survey may be conducted. In addition, surveyors may also conduct ad hoc complaint surveys, which are surveys carried out in response to specific complaints made about a SNF.


The purpose of surveys is to identify actual or potential areas of noncompliance with relevant federal healthcare rules and regulations.  In order to avoid penalties for noncompliance SNF’s must be in substantial compliance not only with Medicare and Medicaid requirements, but also with relevant state laws.


If a surveyor finds an area of noncompliance during a survey he/she will classify the violation according to a federal “F-Tag” numbering system, so-called because SNF regulations are set forth in subsection F of the federal regulations governing SNF’s. Each F-Tag corresponds to a particular long-term care facility regulation.


An instance of noncompliance is also known as a “deficiency,” and for each deficiency discovered the surveyor must assign it an alphabetical letter based on how serious it is. In doing so, the surveyor will first determine the level of harm caused by the deficiency to the SNF resident(s). This determination is referred to as the “severity” of the deficiency. Then, the surveyor will determine the scope of the deficiency. Finally, based on the severity and scope of the deficiency the surveyor will assign it an alphabetical letter on a scale of A through L, with “A” being the least serious and “L” being the most serious.


Enforcement actions taken against nursing homes that are not in compliance with federal rules or regulations are called remedies. Under the Social Security Act and the Code of Federal Regulations (CFR) the Centers for Medicare and Medicaid Services (CMS) or state authorities may impose one or more remedies when a SNF is noncompliant. The type of remedy or remedies imposed depends on the letter assigned to each deficiency based on its scope and severity.


Some remedies are mandatory, such as termination of a SNF’s participation in Medicare due to extended noncompliance. Other remedies are discretionary and chosen based on letter associated with the scope and severity of the deficiency and may be customized to address the given SNF’s particular situation. In addition, other remedies may be imposed by state authorities under their licensure authority and for Medicaid-only facilities.


The following remedies may be imposed for noncompliance with federal rules or regulations:


1. Termination of the provider agreement

2. Temporary management

3. Denial of payment for all Medicare and/or Medicaid individuals by CMS

4. Denial of payment for all new Medicare and/or Medicaid admissions

5. Civil money penalties

6. State monitoring

7. Transfer of residents

8. Transfer of residents with closure of facility

9. Directed plan of correction

10. Directed in-service training

11. Alternative or additional State remedies approved by CMS


If during the course of a standard or revisit survey the surveyor finds that a particular SNF’s noncompliance is so severe that it constitutes what’s known as “substandard quality of care” (SQC), then the surveyor will inform the SNF administrator that an extended (or partial extended) survey must be conducted.


A SQC is any deficiency found in 42 CFR, including those relating to Resident Behavior and Facility Practices, Quality of Life, or Quality of Care if such deficiency constitutes an “immediate jeopardy” to resident health or safety; a pattern of or widespread actual harm that is not immediate jeopardy; or where there is no actual harm but a widespread potential for more than minimal harm that is not immediate jeopardy.


Immediate jeopardy is defined as “A situation in which the provider’s noncompliance with one or more requirements of participation has caused, or is likely to cause, serious injury, harm, impairment, or death to a resident” (See 42 CFR Part 489.3).


Immediate jeopardy citations typically result in a fine known as a “Civil Monetary Penalty” which ranges from $3,050 per day to $10,000 per day and may be imposed retroactively to the date of the incident.


Any remedies imposed will remain in effect until the SNF is determined to be in substantial compliance and satisfies the Repeated Substandard Quality of Care (42 CFR §488.414(a)(3)); until it can show that it’s able to remain in substantial compliance with all requirements; or until the SNF is terminated from the Medicare and/or Medicaid programs.


If a SNF is unable to achieve substantial compliance within six months then under the Social Security Act the SNF must be terminated from participation in Medicare and/or Medicaid. In addition, the Social Security Act provides that Medicare and Medicaid payments must be denied for any individual admitted to a SNF that fails to return to substantial compliance within three months.


Given the severity of the penalties that can be imposed on noncompliant SNF’s it’s crucial to stay on top of healthcare rules and regulations. That’s why Clearpol designed Policies.ai software, which uses artificial intelligence and expert human analysis to help SNF’s remain in compliance with healthcare laws. Find out more about our Policies.ai software at Clearpol.com.

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