Nursing Home Admission Agreements
By: H. Kennard Bennett
Fall 2007
The volume of paperwork involved in admitting a loved one to a nursing home seems to rival that of a real estate closing. In addition to the admission agreement itself, there are several additional acknowledgments and permissions that the admissions coordinator will present to the family. Many of these are straightforward and rather innocuous. But the admissions agreement is an important document that should be given a careful review by the family caregiver before signing it. Yet, the practical reality is that most such agreements are signed without being read, much less after consultation with an attorney.
Consider the facts of an Indiana case I will discuss later. Cheryl Sanford was the daughter and only child of Dortha Bagley. Mrs. Bagley, a Medicaid recipient, had been a resident of a nursing facility when she was evicted because that facility had dropped its Medicaid certification. She had little time to find other arrangements. Ms. Sanford was understandably upset because she had to move her mother to the new facility on short notice. Moreover, the facility she wanted to move her to had a waiting list. Sanford testified that she was instructed that she needed to sign the admissions agreement in various places. She was told staff would go over the paperwork with her in a few days. The meeting to fill out the admitting papers was hectic. Ms. Sanford’s testimony revealed that her mother, an Alzheimer’s patient, was present during the process and was disruptive due to confusion surrounding her move. During this meeting, Sanford was also supervising three young children she was babysitting. The circumstances hurried Sanford and she did not read the Agreement. She signed where indicated as she was provided a verbal summary of what the pages said. Hardly a setting conducive to careful consideration of a formal legal document like an admissions agreement!
Fortunately, federal and state laws and regulations are in place that provide certain levels of consumer protection in these admission agreements. Certain provisions are prohibited, and the law already sets forth the obligations of a facility towards its residents regarding the exercise of their “resident rights” and the quality of care to be provided. This paper will outline some of the potential pitfalls found in nursing home admission agreements and how to address them.
The Indiana Administrative Code has a section devoted to admissions policy in Indiana’s nursing facilities. It many ways it mirrors language found in the federal regulations. Here is the relevant section of the Code, 410 IAC 16.2-3.1-16 Admissions Policy:
Sec. 16. (a) The facility must not:
(1) require residents or potential residents to waive their rights to Medicare or Medicaid; or
(2) require oral or written assurance that residents or potential residents are not eligible for, or will not apply for, Medicare or Medicaid benefits.
(b) The facility must not require a third party guarantee of payment to the facility as a condition of admission or expedited admission, or continued stay in the facility. However, the facility may require an individual who has legal access to a resident's income or resources available to pay for facility care to sign a contract, without incurring personal financial liability, to provide facility payment from the resident's income or resources.
(c) In the case of a person eligible for Medicaid, a nursing facility must not charge, solicit, accept, or receive, in addition to any amount otherwise required to be paid under the state plan, any gift, money, or donation, or other consideration as a precondition of admission, expedited admission, or continued stay in the facility. However, a nursing facility may:
(1) charge a resident who is eligible for Medicaid for items and services the resident has requested and received and that are not specified in the state plan as included in the term "nursing facility services" so long as the facility gives proper notice of the availability and cost of these services to residents and does not condition the resident's admission or continued stay on the request for and receipt of such additional services; or
(2) solicit, accept, or receive a charitable, religious, or philanthropic contribution from an organization or from a person unrelated to a Medicaid-eligible resident, or potential resident, but only to the extent that the contribution is not a condition of admission, expedited admission, or continued stay in the facility for a Medicaid-eligible resident.
(d) A facility must not admit, on or after January 1, 1989, any new residents with:
(1) mental illness unless the state mental health authority or its designee has determined, based upon an independent physical and mental evaluation performed by a person or entity other than the state mental health authority or its designee, prior to admission that:
(A) because of the physical and mental condition of the individual, the individual requires the level of services provided by the facility; and
(B) if the individual requires such level of services, whether the individual requires specialized services for mental illnesses or services of a lesser intensity; or
(2) mental retardation unless the state mental retardation authority or its designee has determined prior to admission that:
(A) because of the physical and mental condition of the individual, the individual requires the level of services provided by the facility; and
(B) the individual requires such level of services, whether the individual requires specialized services or services of a lesser intensity for mental retardation.
(e) For purposes of IC 16-28-5-1, a breach of:
(1) subsection (d) is a deficiency; and
(2) subsection (a), (b), or (c) is a noncompliance.
Pre-Admission Screening and Resident Review (PASSR)
While not usually found in a written admission agreement, a resident’s admission is conditioned upon passing a screening process designed to weed out residents suffering from mental illness (not to be confused with dementia, such as Alzheimer’s). This screening process is referred to as the Pre-Admission Screening and Resident Review, or “PASSR.” It is a product of the 1987 Nursing Home Reform Law and applies to all Medicaid-certified facilities. (Most nursing facilities are Medicaid-certified.) It requires that the state’s mental health authority review the appropriateness of nursing facility care. This requirement was in response to findings that states had a financial interest in placing the mentally ill in Medicaid nursing facilities, where the federal government shares in the costs of care. This PASSR is done at the time of admission and is usually pro forma in that there’s little doubt that the resident will qualify. Residents must submit to the PASSR review as a precondition to admission to a Medicaid-certified facility.
Disclosing Resident’s Financial Information During Admission Process
Private pay rates in nursing homes are usually significantly higher than Medicaid reimbursement rates. Nursing homes, being the businesses that they are, generally seek out private pay residents. Some nursing homes will attempt to discover a prospective resident’s assets and income level in an effort to learn if the applicant will be private pay.
It is illegal to discriminate against residents on the basis of payment source. Federal law requires that “A nursing facility must establish and maintain identical policies and practices regarding transfer, discharge, and the provision of services required under the State [Medicaid] plan for all individuals regardless of source of payment.” 42 U.S.C. §1396r(c)(4)(A); 42 C.F.R. §483.12(c)(1). However, the law does not expressly prohibit payment source discrimination in the admission process. (In 1993 a House Conference Report asserted that financial screening in the admission process was in violation of the existing law. That hasn’t stopped the practice of financial screening, however.)
Because the practice of financial screening is at least legally suspicious, practitioners advising clients would seem to be well within their rights to advise some level of vagueness in response to questions concerning the resident’s ability to pay. Some verbal assurance on the part of the family that the facility will be paid for their services should usually do the trick. On the other hand, elder law practitioners might advise a private pay for the first month, if possible, which would smooth the way into the chosen facility. Remember, after the resident is admitted they may not be discriminated against on the basis of payment status.
Discrimination on the Basis of Care Needed
Facilities may also be inclined to discriminate against the admission of a resident whose care needs are more than the routine resident. These “heavy care” residents require more assistance from facility staff and therefore increase the facility’s cost of care. Litigation in this area is rare. However, such discrimination is likely illegal under the provisions of The Rehabilitation Act of 1973 (29 U.S.C. §794) or the Americans with Disabilities Act of 1990 (42 U.S.C. §§ 12101, 12131.)
Imposing Financial Responsibility on the Family
Federal law makes it very clear that family members may not be required to sign personal guarantees for the payment of their loved one’s bill. The law specifically states that a nursing facility “must not require a third-party guarantee of payment to the facility as a condition of admission (or expedited admission) to, or continued stay in, the facility.” 42 U.S.C. §§1395i-3(c)(5)(A)(ii), 1396r(c)(5)(A)(ii); 42 C.F.R. §483.12(d)(2). This prohibition is true even if the resident is a private pay. 56 Fed.Reg 48,841 (1991). See also Surveyor’s Guideline to 42 C.F.R. §483.12(d)(2). Indiana regulations also are specific in prohibiting any requirement of third-party guarantees. See 410 I.A.C. 16.2-3.1-16(b).
Commonly, the admission agreement will have a place for the resident or the resident’s “Responsible Party” to sign. Family members or a friend who signs an admission agreement can only do so on behalf of the resident and not in some individual capacity. Some nursing homes have been known to have family members sign some form of guarantee “voluntarily” in an attempt to avoid the law’s prohibition against “requiring” a third-party guarantee. Apart from the actionable deception involved with such tactics, there would be no legal consideration extending to the third-party guarantee that would lead to any such contract being enforceable. See Podsky v. First Healthcare Corp., 58 Cal.Rpt.2d 89, 99-104.
Extra Charges
There are some nursing facilities that charge extra for ancillary supplies, such as incontinence pads, wedge cushions, etc. These extra charges may not be made for those residents covered by Medicare or Medicaid, as the facility is obligated to accept the Medicare or Medicaid reimbursement as payment in full. Nevertheless, in private pay circumstances these extra charges can be unpleasant surprises.
However, in order for such separate charges to be appropriate, they must be clearly set forth in the admission agreement. This is true for a Medicare/Medicaid-certified facility regardless of whether the resident is a Medicare or Medicaid recipient. 42 C.F.R. §483.10(b)(6).
Arbitration Clauses
A relatively new phenomenon in admission agreements is the inclusion of a mandatory binding arbitration clause. Such a clause was the subject of the Sanford case cited above. The case involved a personal injury and wrongful death claim associated with Dortha Bagley’s stay at Castleton Health Care Center. Plaintiff alleged that the nursing home was liable for a fall Mrs. Bagley sustained that resulted in a fractured hip and a urinary tract infection. Mrs. Bagley died of complications from the hip surgery that followed.
The Indiana Court of Appeals held that such arbitration clauses are enforceable. The court stated that the arbitration clause was not an unconscionable adhesion contract, and that the clause was not an impermissible consideration as a precondition to a patient’s admission contrary to federal law.
Such clauses are finding their way into many forms of consumer contracts. Arbitration can, in the right circumstances, provide for a more efficient means of resolving disputes and claims. Whether they are appropriate in consumer agreements is highly debatable. First, arbitration can be more expensive. The courts are publicly subsidized while the costs of arbitration are fully borne by the parties. Second, there can be a bias on the part of arbitrators in favor of businesses that provide the arbitration business to such arbitrators. Third, discovery enforcement can be limited; arbitrators do not have the powers that courts do to require fair and full disclosure of evidence. Fourth, such arbitration proceedings are private and thus the public is deprived of knowing the nature of the claims, the evidence supporting the claims that may be relevant to other consumers, and the nature of the resolution.
Because of the concerns of consumer advocates, there is an effort underway in Congress to prohibit such clauses in consumer contracts. The Arbitration Fairness Act of 2007, was introduced in the Senate by Sen. Russ Feingold (D-WI) and in the House by Rep. Hank Johnson (D-GA). (H.R. 3010) It would not prohibit arbitration, but would require that agreements to arbitrate employment, consumer, franchise, or civil rights disputes be made after the dispute has arisen. The Act was introduced July 12, 2007.
For the time being, Sanford stands as the law in Indiana. Whether such clauses will become common in Indiana nursing homes is questionable however. In a noteworthy footnote the court stated:
In light of exclusive arbitration clauses, like the one at issue, we query whether qualified medical health care providers retain the ability to avail themselves of the provisions and attendant benefits of the Medical Malpractice Act, including a limitation on the amount of the provider's liability-i.e., Indiana Code Section 34-18-14-3-and review of the plaintiff's claim by a medical review panel-i.e., Indiana Code Section 34-18-8-4. Thus, these qualified providers need to be cognizant that, should they include these exclusive arbitration clauses in their contracts, they might be relinquishing not only their rights to a jury trial and to a broader review on appeal, but also their right to avail themselves of the Medical Malpractice Act.
Sanford, supra, FN3.
Although dicta, the footnote raises an important point. Increasingly, nursing homes in Indiana are electing to become “qualified providers” under Indiana’s Medical Malpractice Act. That Act sets forth a pre-suit panel review process and caps damages for the provider. As the court notes, it is doubtful that a nursing home will be allowed to have it both ways – they may not be able to afford themselves the protections of the Medical Malpractice Act while at the same time taking advantage of the mandatory bind arbitration clause.
Disclaimer: The information contained herein should not be considered legal advice. Every person’s circumstance is different. Before relying upon anything stated in this document you should seek the advice of your own legal counsel.