Nursing Homes Must Exercise Caution When Assisting Residents With Medicare Advantage Changes

Despite ample and specific guidance from the Centers for Medicare & Medicaid Services (“CMS”) dating back to 2015 regarding the measures nursing homes should take when assisting residents with Medicare Advantage (“MA”) disenrollment, on June 29, 2022, the U.S. Attorney for the Southern District of New York announced a $7.85 million settlement with a Bronx nursing home and its administrative support contractor for switching a number of residents’ coverage from MA to Original Medicare, often without those residents’ knowledge or consent. The conduct cited in the settlement occurred from 2016 to 2019.

Under 42 C.F.R. § 422.62(a)(4), eligible institutionalized individuals “at any time may elect an MA plan or change their election from an MA plan to Original Medicare, to a different MA plan, or from Original Medicare to an MA plan.” Moreover, they generally are not limited as to the number of changes they choose to make. However, applicable regulations and guidance make clear that any change in coverage should be initiated by the Medicare beneficiary or the beneficiary’s authorized representative.

As part of the settlement, the defendants in the case — TCPRNC, LLC d/b/a Plaza Rehab and Nursing Center (“Plaza”), and Citadel Consulting Group LLC d/b/a Citadel Care Centers LLC (“Citadel”) — admitted, acknowledged, and accepted responsibility for the following:

• A Citadel manager set a monthly “disenrollment quota” for Plaza and identified specific residents of the facility as potential candidates for disenrollment from MA as a means of increasing revenues to the facility through reimbursement under Original Medicare.
• The Citadel manager instructed Plaza staff to disenroll the residents from their MA plans without regard to whether the residents or their legal representatives had consented to the disenrollment.
• Plaza had policies and procedures in place that instructed staff to have residents or their legal representatives sign forms memorializing their consent to an insurance change before disenrolling the residents from their MA plans. However, Plaza staff often did not obtain the consent of the residents or their authorized legal representatives, nor did they obtain a signed consent form.
• In some instances, Plaza staff obtained consent from residents who lacked the capacity to provide such consent. Despite having mental status assessments for these residents, Plaza staff failed to consult them and did not otherwise evaluate the capacity of the residents to consent to the change in coverage.
• In other cases, Plaza staff obtained consent from residents but did not explain that the change in coverage would have an effect on copays and deductibles, as well as supplemental coverage that may be provided under certain MA plans but not under Original Medicare.
• Plaza staff effectuated the changes in residents’ coverage by logging on to the Medicare website and using the residents’ personal information to disenroll them from their chosen Medicare Advantage prescription drug plan, which had the effect of automatically disenrolling the residents from their MA plan and enrolling them in Original Medicare. In some cases, the staff misrepresented who they were or their authority when performing the disenrollments.
• Defendants often did not offer residents assistance in re-enrolling them in an MA plan upon discharge from the facility.

Of the $7.85 million settlement amount, the Stipulation and Order issued by the U.S. District Court for the Southern District of New York notes that $3.925 million plus applicable interest constitutes restitution to the government for amounts paid under Original Medicare above the amounts that would have been paid by the Medicare Program to the private Medicare Advantage Organization in the form of monthly capitated payments. The settlement also requires the defendants to enter into a corporate integrity agreement and comply with regulatory requirements and guidance concerning health coverage changes.

As noted above, CMS originally issued guidance to long-term care facilities on health plan enrollments and disenrollments in 2015. It updated that guidance in October 2021 in response to reports about the “unacceptable practice” of MA disenrollments initiated by facilities to maximize Medicare reimbursement.

In its updated guidance, CMS emphasized that only a Medicare beneficiary, the beneficiary’s authorized or designated representative, or the party authorized to act on behalf of the beneficiary under state law can request enrollment in or voluntary disenrollment from a Medicare health or drug plan. If any of these individuals requests assistance with a change, CMS prescribed the steps that the facility should take to comply with regulations regarding enrollment/disenrollment, as well as residents’ rights provisions:¹

• Explain orally and in writing the impact to the beneficiary if they change coverage. This should include, at a minimum, the following:
  • A clear explanation, where applicable, that the beneficiary would no longer be a member of the Medicare health plan they chose.
  • An explanation that medical services will be billed to Original Medicare and/or Medicaid if the beneficiary is disenrolled from a Medicare health plan, and what this means regarding deductibles and co-pays/coinsurances and/or loss or lack of supplemental coverage for the beneficiary.
  • The name of the drug plan that will cover the beneficiary’s medications, including the deductible and co-pays/coinsurances, especially related to their current drug therapy.
  • Specific information regarding the beneficiary’s opportunities to change Medicare plans and Medicare prescription drug coverage while in the facility and when discharged.
  • An explanation that enrollment in the new Medicare health or drug plan will be effective the first day of the month following the plan’s receipt of the enrollment request.
  • An explanation that, in particular cases, the beneficiary may not be able to re-enroll in their previous plan.
• Develop written policies and procedures regarding the process of assisting beneficiaries with changing their healthcare coverage. At a minimum, information should include:
  • The circumstances under which the facility can assist a beneficiary with a plan change.
  • The need to obtain a document signed by the beneficiary or representative that acknowledges that the specific information regarding the impact of a change in coverage was provided to them orally and in writing, and that that the beneficiary and/or the representative understands the information. This includes not only the language used to describe the information but the cognitive ability of the resident to understand the explanation. Documentation should include the cognitive assessment and the representative’s authority to act on behalf of the resident.
  • The need to obtain an attestation signed by the facility staff member that assisted with the change in enrollment, attesting that the beneficiary or representative requested the change and that the beneficiary or representative (as applicable) received and understood the minimum required information listed above.

CMS emphasized that a facility that cannot provide documentation of a resident’s request to change enrollment is suggestive that the change is not legally valid and could result in the reinstatement of the resident’s previous coverage and referral of the matter to the Medicare Drug Integrity Contractor for investigation.

Following this settlement, there can be no doubt that CMS will continue to scrutinize Medicare Advantage disenrollments. By understanding the law, implementing effective policies and procedures, and training staff to follow those policies and procedures, nursing homes and their reimbursement consultants will be better prepared and able to withstand such scrutiny.

[1] 42 C.F.R. § 483.10(g)(18)(i) and (g)(18)(ii).