Medicare and Medicaid Programs; Civil Money Penalties for Nursing Homes, 15106-15128 [2011-6144]

Agencies

• Centers for Medicare & Medicaid Services
• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Federal Register Volume 76, Number 53 (Friday, March 18, 2011)]
[Rules and Regulations]
[Pages 15106-15128]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-6144]



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Vol. 76

Friday,

No. 53

March 18, 2011

Part III





Department of Health and Human Services





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Centers for Medicare and Medicaid Services



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42 CFR Part 488



Medicare and Medicaid Programs; Civil Money Penalties for Nursing 
Homes; Final Rule

Federal Register / Vol. 76 , No. 53 / Friday, March 18, 2011 / Rules 
and Regulations

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare and Medicaid Services

42 CFR Part 488

[CMS-2435-F]


Medicare and Medicaid Programs; Civil Money Penalties for Nursing 
Homes

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Final rule.

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SUMMARY: This final rule will revise and expand current Medicare and 
Medicaid regulations regarding the imposition and collection of civil 
money penalties by CMS when nursing homes are not in compliance with 
Federal participation requirements in accordance with section 6111 of 
the Affordable Care Act of 2010.

DATES: These regulations are effective on January 1, 2012.

FOR FURTHER INFORMATION CONTACT: Lori Chapman, (410) 786-9254.

SUPPLEMENTARY INFORMATION: 

I. Background

    To participate in the Medicare program or the Medicaid program, or 
both, long-term care facilities must be certified as meeting Federal 
participation requirements. Section 1864(a) of the Social Security Act 
(the Act) authorizes the Secretary to enter into agreements with State 
survey agencies to determine whether facilities meet the Federal 
participation requirements for Medicare. Section 1902(a)(33)(B) of the 
Act provides for State survey agencies to perform the same survey tasks 
for facilities participating or seeking to participate in the Medicaid 
program. The results of Medicare and Medicaid related surveys are used 
by CMS and the State Medicaid agency, respectively, as the basis for a 
decision to enter into or deny a provider agreement, recertify facility 
participation in one or both programs, or terminate the facility from 
the program. They are also used to determine whether one or more 
enforcement remedies should be imposed where noncompliance with Federal 
requirements is identified.
    To assess compliance with Federal participation requirements, 
surveyors conduct onsite inspections (surveys) of facilities. In the 
survey process, surveyors directly observe the actual provision of care 
and services to residents and the effect or possible effects of that 
care to assess whether the care provided meets the assessed needs of 
individual residents.
    Among the statutory enforcement remedies available to the Secretary 
and the States to address facility noncompliance are civil money 
penalties. Authorized by sections 1819(h) and 1919(h) of the Act, civil 
money penalties may be imposed for each day or each instance of 
facility noncompliance, as well as for past instances of noncompliance 
even if a facility is in compliance at the time of the current survey. 
The regulations that govern the imposition of civil money penalties, as 
well as other enforcement remedies authorized by the statute, were 
published in the Federal Register on November 10, 1994 (59 FR 56116), 
and on March 18, 1999 (64 FR 13354). These rules are set forth at Part 
488, Subpart F, and the provisions directly affecting civil money 
penalties are set forth at Sec.  488.430 through Sec.  488.444. In the 
proposed rule, published on July 12, 2010, preceding this final 
regulation, we discussed in more detail civil money penalties for 
facility's noncompliance, a facility's option to dispute cited 
deficiencies and the facility's right to waive a hearing within 
specified timeframes and procedures (75 FR 39641).
    As specified in section 1128A(f) of the Act, which is incorporated 
in sections 1819(h) and 1919(h) of the Act, and consistent with the way 
other civil money penalties are recovered, monies collected by CMS are 
returned to the State in proportion commensurate with the relative 
proportion of Medicare and Medicaid beds at the facility in use by 
residents of the respective programs on the date the civil money 
penalty begins to accrue, and remaining funds are deposited as 
miscellaneous receipts of the United States Department of the Treasury. 
Section 1919(h)(2)(A)(ii) of the Act specifies that civil money 
penalties collected by the State must be applied to the protection of 
the health or property of residents of any nursing facility that the 
State or CMS finds deficient, including payment for the cost of 
relocating residents to other facilities, maintenance of operation of a 
facility pending correction of deficiencies or closure, and 
reimbursement of residents for personal funds lost.

II. Summary of the Proposed Provisions and Responses to Comments on the 
Proposed Rule

A. Overview

    In the July 12, 2010 Federal Register (75 FR 39641), we published a 
proposed rule to revise and expand current Medicare and Medicaid 
regulations regarding the imposition and collection of civil money 
penalties by CMS when nursing homes are not in compliance with Federal 
participation requirements. In response to the proposed rule, we 
received approximately 213 public comments. We received comments from 
various States, health care associations, nursing homes, individuals, 
provider advocacy organizations and consumer advocacy organizations. 
The comments for this proposal ranged from general support of or 
general opposition to the proposal to more specific comments regarding 
the proposed rule.
    In this final rule we provide a summary of each proposed provision, 
a summary of the public comments received, our responses to them, and 
any changes we are implementing in this final rule as a result of 
comments received.
    Section 6111 of the Patient Protection and Affordable Care Act (the 
Affordable Care Act) (Pub. L. 111-148), enacted on March 23, 2010, 
amended sections 1819(h) and 1919(h) of the Social Security Act (the 
Act) to incorporate specific provisions pertaining to the imposition 
and collection of civil money penalties when facilities do not meet 
Medicare and Medicaid participation requirements.
    We believe that through these new statutory provisions, Congress 
has expressed its intent to improve efficiency and effectiveness of the 
nursing home enforcement process, particularly as it relates to civil 
money penalties imposed by CMS.
    These provisions in section 6111 of the Affordable Care Act seek to 
reduce the delay which results between the identification of problems 
with noncompliance and the effect of certain penalties that are 
intended to motivate a nursing home to maintain continuous compliance 
with basic expectations regarding the provision of quality care. They 
also seek to eliminate a facility's ability to significantly defer the 
direct financial effect of an applicable civil monetary penalty until 
after an often long litigation process.
    To implement these new statutory provisions, we proposed to revise 
Part 488 by adding new Sec.  488.431 and Sec.  488.433. We also 
proposed revisions to existing regulations throughout Part 488 to 
further incorporate the new statutory provisions. The proposed changes 
would be consistent with section 6111 of the Affordable Care Act. We 
noted that the proposed rule would provide for the establishment of an 
escrow account where civil money penalties may be placed until any 
applicable administrative appeal processes have been completed; allow 
for civil money penalty reductions when facilities self-

[[Page 15107]]

report and promptly correct their noncompliance; in cases where civil 
money penalties are imposed, offer an independent informal dispute 
resolution process where the interests of both facilities and residents 
are represented and balanced; and, improve the extent to which civil 
money penalties collected from Medicare facilities can benefit nursing 
home residents. Through the proposed revisions, we intended to directly 
promote and improve the health, safety, and overall well-being of 
residents.

B. Analysis of and Response to Public Comments

1. Establishment of an Escrow Account for Civil Money Penalties
    Under the existing process, facilities are able to avoid paying a 
civil money penalty for years because it can often take a long time for 
administrative appeals to be completed. Concerns about the delays in 
payment of a civil money penalty have been raised in independent 
reports issued by both the United States Government Accountability 
Office (GAO) and the Office of the Inspector General of the Department 
of Health and Human Services (OIG).
    Sections 6111(a) and (b) of the Affordable Care Act expand sections 
1819(h)(2)(B)(ii) and 1919(h)(3)(C)(ii) of the Act by adding a new 
subsection (IV)(bb) which states that, in the case of civil money 
penalties imposed for each day of noncompliance, the penalty will not 
be collected until after the independent informal dispute resolution 
process under new section (IV)(aa) is completed, by which the facility 
may informally challenge the noncompliance on which the penalty was 
based. (The added provisions regarding the new independent informal 
dispute resolution process are discussed later in section II.B.3. of 
this preamble.)
    In the proposed rule, we interpreted the language of this new 
section (IV)(bb) to mean that any per day civil money penalty would be 
effective and continue to accrue but would not be collected during the 
time that the determination of noncompliance which led to the 
imposition of a civil money penalty is subject to the independent 
informal dispute resolution process. This is consistent with other 
provisions of section 6111 of the Affordable Care Act and when viewed 
in the context of the purpose of the enforcement process of the Social 
Security Act. First, new subsection (IV)(cc) of sections 
1819(h)(2)(B)(ii) and 1919(h)(3)(C)(ii), as amended by section 6111 of 
the Affordable Care Act, permits the collection of the civil money 
penalty upon completion of an independent informal dispute resolution 
process. If the per day civil money penalty did not apply and accrue 
during the period of an independent informal dispute resolution 
process, there would not be any civil money penalty funds to collect 
upon completion of the process in those cases where the independent 
informal dispute resolution does not result in any change to the 
findings. In those cases where this independent informal dispute 
resolution process does result in a change to the findings that would 
lower the civil money penalty amounts, then the accrual would be 
immaterial because the civil money penalties would be appropriately 
adjusted (i.e. were reduced or rescinded) back to the effective date of 
the civil money penalty. Second, it has been CMS's longstanding 
position that sections 1819(h) and 1919(h) of the Act provide that a 
per day civil money penalty can begin to accrue as early as the date 
that a facility was first determined to be out of compliance and 
continues to accrue, without interruption, until a facility has 
achieved substantial compliance or is terminated from the program. 
Additionally, the Act provides that the effective date of a civil money 
penalty can be retroactive to the date of an adverse event that was 
documented through the survey process to have occurred prior to the 
issuance of a formal written notice informing the facility that a per 
day civil money penalty has been applied. Section 6111 of the 
Affordable Care Act does not change the existing nursing home 
enforcement process; rather it adds an additional process to be 
available to facilities as a result of the Secretary's new authority to 
collect a civil money penalty before exhaustion of administrative 
remedies. Third, since a facility may continue to be out of substantial 
compliance for a period of time until it is terminated from the 
program, an interruption in the civil money penalty accrual would be 
contrary to the intended effect of creating financial incentives for 
facilities to maintain compliance and promptly correct any 
noncompliance. Since we believe Congress intended to speed and 
strengthen the motivational and deterrent effects of civil money 
penalties, we believe that suspending the accrual of a civil money 
penalty while the underlying noncompliance was being informally 
challenged would undermine such motivational effects. We therefore 
proposed that CMS will not collect applicable civil money penalty funds 
until either an independent informal dispute resolution process is 
completed or 90 days has passed since the notice of civil money penalty 
imposition has been issued, whichever is earlier. The 90 day period is 
the maximum combined time period permitted from the date of the notice 
of civil money penalty imposition (when a facility has the opportunity 
to request an independent informal dispute resolution) to the date for 
completion of the independent informal dispute resolution process 
itself. This combined maximum time period is consistent with the 
provisions of new sections 1819(h)(2)(B)(ii)(IV)(cc) and 
1919(h)(3)(C)(ii)(IV)(cc) of the Act, as amended by section 6111 of the 
Affordable Care Act (which is discussed in more detail below).
i. Collection and Placement in Escrow Account
    Sections 6111(a) and (b) of the Affordable Care Act add new 
sections 1819(h)(2)(B)(ii)(IV)(cc) and 1919(h)(3)(C)(ii)(IV)(cc) of the 
Act which provide the authority for CMS to collect and place civil 
money penalties into escrow accounts pending the resolution of an 
appeal. This may be done on the earlier of (1) the date when a 
requested independent informal dispute resolution process is completed, 
or (2) 90 days after imposition of the civil money penalty. We have 
proposed implementing these requirements at Sec.  488.431(b)(1)(i) and 
Sec.  488.431(b)(1)(ii). While the amended statutory language 
contemplates that a facility will be either wholly successful or 
unsuccessful in challenging its determination of noncompliance during 
the independent informal dispute resolution process, the proposed 
regulation reflects an understanding that there are times when a 
facility is partly successful. In such instances, the facility may be 
able to argue successfully for change to only some of its cited 
noncompliance.
    If such change as a result of the independent informal dispute 
resolution were to affect the civil money penalty amounts owed, (for 
example, through deletion of a germane deficiency), then the amount 
initially imposed would need to be adjusted accordingly before being 
collected and placed in the escrow account.
ii. When a Facility Is Successful in a Formal Administrative Appeal
    Sections 6111(a) and (b) of the Affordable Care Act amend sections 
1819(h)(2)(B)(ii) and 1919(h)(3)(C)(ii) of the Act by adding new 
section (IV)(dd) which provides that collected civil money penalties 
may be kept in an escrow account pending the resolution

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of any subsequent appeals. Sections 6111(a) and (b) of the Affordable 
Care Act also adds new section (IV)(ee) to revise sections 
1819(h)(2)(B)(ii) and 1919(h)(3)(C)(ii) of the Act, to require that 
when a final administrative decision results in the successful appeal 
of a facility's cited determination of noncompliance that led to the 
imposition of the civil money penalty, that civil money penalty amount 
being held in escrow will then be returned to the facility, with 
interest. We have proposed at Sec.  488.431(d)(2) that if the 
administrative law judge (ALJ) reverses the civil money penalty amount 
in whole or in part, the escrowed amount continues to be held pending 
expiration of the time for CMS to appeal the ALJ decision or, where CMS 
does appeal, a Departmental Appeals Board decision affirming the ALJ's 
reversal of the civil money penalty. We believe these new statutory 
provisions contemplate not only a situation where the facility is 
either wholly successful or unsuccessful in its administrative appeal 
of a determination which led to a civil money penalty imposition, but 
that they also include situations in which a facility is partially 
successful in its appeal. Thus, the proposed regulation recognizes this 
possibility and provides that CMS will return collected civil money 
penalty amounts commensurate with the final administrative appeal 
results. We do not plan to include specifics in this regulation about 
how these requirements would be operationalized because we believe that 
such guidance is more appropriately suited for inclusion in our State 
Operations Manual after dialogue with interested stakeholders. However, 
we do expect that the collection of a per day civil money penalty under 
this final rule may be a two-step process. In proposed Sec.  
488.431(b)(2), we expect that in instances when a facility has not 
achieved substantial compliance at the time a per day civil money 
penalty can be collected and placed in an escrow account, that 
collection would consist of the penalty amount that has accrued from 
the effective date of the penalty through the date of collection. 
Another collection would need to occur later in the process for any 
final balance determined to be due and payable once the facility 
achieves substantial compliance or is terminated from the program.
    The comments we received and our responses are set forth below.
    Comment: A few commenters wanted to know who will be responsible 
for the collected amounts and how will it be processed and tracked.
    Response: CMS will be responsible through its accounting component 
to oversee the collection process and the maintenance of the escrow 
account, while a CMS data component will maintain the system that will 
record and track any possible administrative appeals associated with 
the collected civil money penalty.
    Comment: Several commenters expressed concern that the early 
collections and escrowing of civil money penalty amounts has the 
potential for disrupting the cash flow that nursing homes need to 
successfully operate especially in smaller facilities. Other commenters 
felt CMS may impose significant civil money penalties on a SNF that may 
not have the available resources to put the total civil money penalty 
amount into escrow and to pay the costs associated with a formal 
appeal. If the resources are unavailable and there are no alternatives 
to posting the full amount of the civil money penalties, the commenters 
argued that CMS will have effectively denied participating SNFs any 
meaningful opportunity to contest survey findings. Such a result would 
operate to deprive SNFs of their due process rights under the 5th 
Amendment to the U.S Constitution based upon their recognized property 
and liberty interest. CMS should therefore permit SNFs to enter into 
payment plans, to post bonds or to use other alternative approaches to 
secure payment and allow SNFs to freely access these options.
    Response: We understand that there may be rare cases where a 
particular provider could have limited funds due to the financial 
viability of their entity. In fact, our existing regulations at Sec.  
488.438 provide that a facility's financial condition is one factor 
that is considered in determining the amount of the civil money penalty 
to be imposed. However, the commenter raises the prospect that the 
problem for the facility may not be so much the eventual sum total 
amount of civil monetary payments due, but rather the more immediate 
timetable for the placement of funds in escrow. Therefore, in response 
to the comments received, we have revised Sec.  488.431(b) by adding a 
new subsection (3) that states ``CMS may provide for an escrow payment 
schedule that differs from the collection times of paragraph (1) of 
this subsection in any case in which CMS determines that more time is 
necessary for deposit of the total civil money penalty into an escrow 
account, not to exceed 12 months if CMS finds that immediate payment 
would create substantial and undue financial hardship on the 
facility.''
    In addition, at Sec.  488.431(b)(4), we state that ``If the full 
civil money penalty is not placed in an escrow account within 30 
calendar days from the date the provider receives notice of collection, 
or within 30 calendar days of any due date established pursuant to a 
hardship finding under paragraph (b)(3), CMS may deduct the amount of 
the civil money penalty from any sum then or later owed by CMS or the 
State to the facility in accordance with Sec.  488.442(c).''
    While we appreciate the practical financial challenges for some 
nursing homes in rare circumstances, we do not agree that under this 
rule facilities would be denied any due process. The new independent 
informal dispute resolution process is an option available for 
facilities to contest survey findings prior to the collection of civil 
money penalties to be placed in escrow and should reduce the chances of 
erroneous deprivation. This is followed by post-collection full formal 
hearing before the Departmental Appeals Board that has always been 
available for contesting the findings that led to the imposition of a 
civil money penalty. We believe that these two processes address any 
due process concerns. Furthermore, we believe that there are additional 
safeguards and protections available to facilities to challenge the 
accuracy of survey findings at various points during the survey, 
including interviews during the survey and the exit conference.
    Comment: One commenter recommended changing ``may'' to ``shall'' in 
proposed Sec.  488.431(b)(1) so that the civil money penalty is always 
placed in escrow when a facility requests independent informal dispute 
resolution. Conversely, we received several comments indicating that 
the statutory language appeared to be discretionary and allowed the 
Secretary to require that not all civil money penalties be placed in 
escrow.
    Response: Section 6111 of the Affordable Care Act amends sections 
1819(h) and 1919(h) of the Act that provide the Secretary with the 
broad discretion to collect and place civil money penalties into an 
escrow account pending resolution of any subsequent appeal. The 
opportunity to participate in an independent informal dispute 
resolution is triggered when a civil money penalty imposed against the 
facility is subject to being collected and placed in an escrow account 
prior to the resolution of an appeal. In order to phase in the new 
collection and escrow provisions, CMS intends to initially focus only 
on civil money penalties imposed as a result of the most serious 
deficiencies. These would be the civil

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money penalties that would be subject to being placed into escrow and, 
subsequently, an independent informal dispute resolution process. Thus, 
we are revising proposed Sec.  488.431(a) to clarify that the 
opportunity for independent informal dispute resolution will be offered 
within 30 days of the notice of the imposition of a civil money penalty 
that will be collected and placed into escrow. We are also revising 
Sec.  488.431(b) and Sec.  488.442 to clarify that the collection 
process and due date for less serious civil money penalties will be the 
same for civil money penalties imposed by the state; in other words, 
CMS will use the process that is used by the states for collecting 
those penalties that are not placed into escrow until CMS completely 
phases in the new collection process. CMS will issue further guidance 
at a later date regarding the collection and escrow provision as well 
as the companion independent informal dispute resolution process.
    Comment: One commenter wanted clarification on CMS's proposed 
establishment of an escrow account for civil money penalties. One 
commenter pointed out that in the case of per day penalty, subsection 
(a)(1)(B)(IV)(bb) of section 6111 is explicit that ``a penalty may not 
be imposed for any day during the period beginning on the initial day 
of imposition of the penalty and ending on the day on which the 
informal dispute process under item (aa) is completed.'' The NPRM 
states that CMS interprets this to mean that ``any per day civil money 
penalty would be effective and continue to accrue but not be 
collected.'' A commenter asked if this means the civil money penalty is 
not formally imposed in the first notice to the facility. Another 
commenter argued that CMS ignores the quoted language, interpreting the 
legislation to mean that a per day penalty cannot be collected during 
the period between imposition of the penalty and the conclusion of the 
dispute resolution process, but it can continue to accrue and be 
collected thereafter. The commenter argued that none of the reasons CMS 
offers for its interpretation are compelling or supported in law, and 
that the goal of the survey and certification process is to verify or 
secure substantial compliance with federal requirements, not generate 
revenue. Secondly, the commenter stated that long standing positions 
must yield to changes in the law, that CMS has no authority to render 
this minimal incentive smaller still, and that if anything, the 
interruption in penalty accrual is incentive for CMS to provide for 
speedy independent review processes.
    Response: The notice of the opportunity for the independent 
informal dispute resolution process is included in the notice of the 
imposition of civil money penalties, as specified in proposed Sec.  
488.431. The Affordable Care Act specifies that the right to 
participate in an independent informal dispute resolution process 
applies when a civil money penalty is imposed and collected to be 
placed into an escrow account pending the resolution of any subsequent 
appeals. To consider the civil money penalty as not being imposed until 
after the independent informal dispute resolution occurs would result 
in circular logic that could result in a facility not being able to 
choose to participate in the independent informal dispute resolution 
since it could not contend that a civil money penalty had been imposed. 
Consequently, we believe that the statute intends that the penalty will 
not be collected until after a facility has had an opportunity for an 
independent informal dispute resolution process by which the facility 
may informally challenge the noncompliance on which the penalty was 
based.
    In addition, if a per day civil money penalty did not apply and 
accrue during the period of an independent informal dispute resolution 
process, there would not be any civil money penalty funds to collect 
upon completion of the process in those cases where the dispute 
resolution does not result in any change to the findings. This would 
create incentives to request an independent informal dispute resolution 
in every case, even when the facts or findings were not truly in 
dispute, simply to reduce the immediate and intended financial impact 
of a civil monetary penalty, a result we view as inconsistent with the 
purpose of strengthening the deterrent effect of such a penalty. In 
those cases where this independent informal dispute resolution process 
does result in a change to the findings that would lower the civil 
money penalty amounts, then the accrual would be immaterial because the 
civil money penalties will be reduced or rescinded back to the 
effective date of the civil money penalty. Furthermore, Section 6111 of 
the Affordable Care Act does not change the existing nursing home 
enforcement process; rather, it adds an additional process to protect 
facilities from early collection of a civil money penalty based on 
possibly erroneous deficiency findings before exhaustion of 
administrative remedies. Finally, since a facility could continue to be 
out of substantial compliance for a period of time until it is 
terminated from the program, an interruption in the civil money penalty 
accrual would be contrary to the intended remedial effect of creating 
financial incentives for facilities to promptly correct and maintain 
compliance with program requirements. Since Congress intended to 
enhance and strengthen the motivational and deterrent effects of civil 
money penalties, we believe that suspending the accrual of a civil 
money penalty while the underlying noncompliance was being informally 
challenged would undermine such motivational effects.
    Comment: Several commenters questioned the meaning of ``applicable 
interest'' in the proposed rule at Sec.  488.431(d)(2). One commenter 
suggested that the rate should be defined as the current rate of 
judgment interest. Other commenters noted that a successful appeal will 
lead to a refund of the escrowed amount with interest, but the way such 
interest is to be calculated is not described and the disposition of 
interest in a failed appeal is not addressed.
    Response: We propose to use the same rate of interest for escrowed 
civil money penalty funds as the rate the Medicare statute applies in 
civil actions over reimbursement disputes. Section 1878(f)(2) of the 
Act governs the payment of interest for providers who seek judicial 
review of Medicare reimbursement cases and win. This section specifies 
that the interest rate is equal to the rate of interest on obligations 
issued for purchase by the Federal Hospital Insurance Trust Fund for 
the month in which the civil action is filed. We propose to use the 
same interest rate formula here, and to use the rate in effect for the 
month that the civil money penalty is required to be placed in escrow. 
The rates for particular months are published at: https://www.cms.gov/MedicareProgramRatesStats/, (click ``Trust Fund Interest Rates''). A 
Departmental Appeals Board decision affirming an administrative law 
judge's (ALJ's) reduction or reversal of a civil money penalty amount 
will result in a return of appropriate funds already placed in escrow, 
plus applicable interest. The disposition of interest in an 
unsuccessful appeal is addressed at proposed Sec.  488.431(d)(2). If 
the ALJ reverses a civil money penalty in whole or in part, the 
escrowed amounts for civil money penalties levied on the basis of those 
deficiencies will continue to be held pending expiration of the time 
for CMS to appeal the decision. Where CMS does appeal and a 
Departmental Appeals Board decision affirms the reversal of the 
applicable

[[Page 15110]]

deficiency, any collected civil money penalty amount owed to the 
facility based on a final administrative decision will be returned to 
the facility with applicable interest.
    Comment: One commenter wanted to know what the time frame is for 
returning collected amounts to the facility, when applicable.
    Response: Any collected civil money penalty amount later determined 
as being owed to the facility will be returned to the facility with 
applicable interest after a final administrative decision. The final 
administrative decision is either a decision of the ALJ or the 
Departmental Appeal Boards (DAB) Appellate Division, or when the time 
to appeal has passed. We expect that funds will be returned within 90 
days of any final administrative decision, which is the same timeframe 
given to facilities to pay a civil money penalty into an escrow 
account.
    Comment: One commenter pointed out that the proposed regulatory 
text at Sec.  488.431(c) refers to Sec.  488.431(e) which does not 
exist.
    Response: We appreciate this technical comment and are revising the 
regulatory text in this final rule at Sec.  488.431(c) to refer to the 
appropriate section, which is Sec.  488.431(d)(2).
    2. Reduction of a Civil Money Penalty by 50 percent for Self-
Reporting and Prompt Correction of Noncompliance.
    Sections 6111(a) and (b) of the Affordable Care Act add new 
sections 1819(h)(2)(B)(ii)(II) and (III) and 1919(h)(3)(C)(ii)(II) and 
(III) of the Act. These sections establish new authorities for CMS to 
reduce a civil money penalty it imposes by up to 50 percent when CMS 
determines that a facility has self-reported and promptly corrected its 
noncompliance. This new provision explicitly provides that such 
reduction is not applicable for noncompliance that constitutes 
immediate jeopardy to resident health and safety as defined at Sec.  
489.3, or that constitutes either a pattern of harm or widespread harm 
to facility residents, or that resulted in a resident's death. 
Additionally, the new provisions clearly specify that this reduction 
does not apply to a civil money penalty that was imposed for a repeated 
deficiency that resulted in a civil money penalty reduction under this 
section in the previous year.
    The proposed rule would permit CMS to reduce a civil money penalty 
if a facility self-reports and promptly corrects quality problems. The 
new reduction authority works in harmony with section 6102 of the 
Affordable Care Act that requires nursing homes to implement an 
effective ethics and compliance program as well as an internal quality 
assurance and performance improvement program. The requirements in both 
sections 6111 and 6102 of the Affordable Care Act emphasize the value 
of systems within a nursing home that can continuously stream 
performance information back to its facility management with the 
expectation that problems with the provision of quality care would be 
identified and promptly remedied, and that system improvements would be 
put in place to prevent recurrence. New sections 1819(h)(2)(B)(ii)(II) 
and (III) and 1919(h)(3)(C)(ii)(II) and (III) of the Act, as amended by 
sections 6111(a) and (b) of the Affordable Care Act, support section 
6102 of the Affordable Care Act, promoting quality assurance and 
improvement by adding a financial incentive through the 50 percent 
reduction of a civil money penalty following self-reporting and prompt 
correction of such problems. We have proposed implementing these new 
requirements at Sec.  488.438(c).
    The language of the new statutory provision permissively states 
that the Secretary may reduce an imposed civil money penalty by up to 
50 percent ``where a facility self-reports and promptly corrects a 
deficiency for which a penalty was imposed under this clause not later 
than 10 calendar days after the date of such imposition.'' We proposed 
that the 50 percent reduction would be applied only where a number of 
conditions are met. First, the facility must have self-reported the 
noncompliance to CMS or the State before it was identified by CMS or 
the State and before it was reported to CMS or the State by means of a 
complaint lodged by a person other than an official representative of 
the nursing home. Second, correction of the noncompliance must have 
occurred within ten calendar days of the date that the facility 
identified the deficient practice. For a number of reasons stated 
below, we proposed not to permit a 50 percent reduction when the self-
reporting or the correction occurred at any later point in time. To 
credit a facility with ``self-reporting'' only after a facility has 
been surveyed and noncompliance has been discovered by CMS would not 
meet the common sense meaning of ``self-reporting.'' We therefore 
proposed to give meaning to this provision in a manner that can best 
encourage facilities to self-report their noncompliance so that they 
can take the necessary corrective action as quickly as possible, 
without waiting for the State or CMS to identify or to cite the 
noncompliance, and thus be rewarded for their efforts. Therefore, under 
the discretion provided to us in this provision, we have declined to 
reduce a civil money penalty by 50 percent when a facility attempts to 
self-report noncompliance after it has already been identified by CMS. 
Rather, we proposed at Sec.  488.438(c)(2)(i) and (ii) that, among 
other criteria, in order for a facility to receive this 50 percent 
reduction, CMS must determine that the facility self-reported and 
corrected the noncompliance within 10 days of identifying it, and 
before it was identified by CMS or the State. In addition we specified 
that any attempted self-reporting of noncompliance by a facility that 
occurs after it was already identified by CMS will not be considered 
for any reduction under this proposed provision.
    In accordance with sections 6111(a) and (b) of the Affordable Care 
Act, which adds new subsections (III)(bb) to sections 1819(h)(2)(B)(ii) 
and 1919(h)(3)(C)(ii) of the Act, noncompliance constituting immediate 
jeopardy, a pattern of harm, widespread harm, or resulting in a 
resident's death is not eligible for the civil money penalty reduction 
that might otherwise be available in the case of self-reporting and 
prompt correction. Therefore, we proposed adding this limitation at 
Sec.  488.438(c)(2)(iv). Noncompliance at these scope and severity 
levels indicates a significant breakdown in facility performance and 
systems to the extent that, even if self-reported, warrants an equally 
significant consequence without the benefit of a considerable 
reduction. Furthermore, new sections 1819(h)(2)(B)(ii)(III)(aa) and 
1919(h)(3)(C)(ii)(III)(aa) of the Act, as amended by sections 6111(a) 
and (b) of the Affordable Care Act, also specify that the reduction 
under these provisions would not apply for facilities that have 
repeated noncompliance for which a penalty reduction under this 
provision was received during the previous year. We proposed to add 
this limitation at Sec.  488.438(c)(2)(v). We believe, and Congress 
clearly indicated, that facilities unwilling or unable to maintain and 
sustain compliance with the same participation requirements over this 
period of time should not be rewarded with a reduced civil money 
penalty. This is consistent with current regulations at Sec.  
488.438(d)(2) which require that the State and CMS must increase the 
civil money penalty amount for any repeated deficiencies for which a 
lower level penalty amount was previously imposed. Current regulations 
at Sec.  488.438(d)(3) define repeated deficiencies as ``deficiencies 
in the same regulatory grouping of requirements

[[Page 15111]]

found at the last survey, subsequently corrected, and found again at 
the next survey.''
    We also proposed at Sec.  488.438(c)(2)(iii) to specify that a 
facility must waive its right to a hearing in order to receive this 50 
percent reduction. This is because, by the facility's own admission 
through its self-reporting and correction, it has acknowledged its 
noncompliance, thereby substantially eliminating the basis for any 
formal appeal. Should a facility elect to expend its resources on an 
administrative appeal, we believe it should choose between the 50 
percent reduction otherwise available or pursuing the appeal. We also 
reinforced the incentive of a facility to invest in its program 
improvement by making it clear that the civil money penalty reduction 
for self-reporting and prompt correction will be at the maximum 50 
percent level rather than any other permissible lower percentage 
amount. The Secretary's authority for such a civil money penalty 
reduction under Section 6111 of the Affordable Care Act is 
discretionary and states that the reduction may be ``up to 50 
percent.'' To maximize the incentives for quality improvement, and to 
remove uncertainty for nursing homes, we proposed to set the percentage 
reduction at the highest permissible level of 50 percent in these 
circumstances.
    In proposed Sec.  488.436(b)(1) and Sec.  488.438(c)(3), we 
proposed to amend these sections to specify that a facility may receive 
only one and not both of the available civil money penalty reductions. 
Under existing regulations at Sec.  488.436(b), a facility may receive 
a 35 percent reduction in its civil money penalty liability if it 
timely waives its right to appeal the determination of noncompliance 
that led to the imposition of the penalty. No other criterion needs to 
be met in order for a facility to get this 35 percent reduction. 
However, in order to receive the higher 50 percent reduction in 
penalty, a facility must not only waive its right to a hearing, but it 
must also meet the specific criteria at proposed Sec.  488.438(c)(2). A 
qualifying facility may receive either the 35 percent reduction for 
waiving its right to a hearing or the 50 percent reduction for self-
reporting and promptly correcting, but in no case will the facility 
receive both reductions at the same time.
    The comments we received and our responses are set forth below.
    Comment: Several commenters were concerned with CMS's 
interpretation of the provisions governing the ability of CMS to reduce 
civil money penalties up to 50 percent when SNFs and certain NFs self-
report and timely correct deficiencies. A main concern was that ten 
days from the facility's identification of its noncompliance may not be 
an adequate amount of time to correct a deficiency and that CMS should 
instead conform to the timeframe that commenters believe was mandated 
by Congress, i.e. ten days from the date of imposition of a civil money 
penalty. In addition, many commenters felt that CMS had exceeded its 
authority when interpreting the statutory language.
    Response: The new statutory language at 1819(h)(2)(b)(ii)(II) 
provides the Secretary with the discretion that she ``may'' reduce a 
civil money penalty by up to 50 percent in the case where a facility 
self-reports and promptly corrects a deficiency for which a penalty was 
imposed ``not later than ten calendar days after the date of such 
imposition''. We agree that the statutory language provides the 
Secretary with the discretion to permit a longer time frame for 
correction than the period in our proposed regulation. We also agree 
that correction of self-identified problems may often require more than 
the proposed ten days, particularly in order to effectuate systemic 
changes that can prevent recurrence of the problem(s). We have 
therefore revised Sec.  488.438(c)(2)(ii) to reflect that we have 
adjusted the timeframe for correcting a self-reported deficiency or 
deficiencies to be the earlier of: (a) 15 calendar days from the date 
of the self-reported circumstance or incident that later resulted in a 
finding of noncompliance, or (b) ten calendar days from the date a 
civil money penalty was imposed. Current regulation at 42 CFR 483.13 
requires a facility to thoroughly investigate certain alleged 
violations and report the findings of its investigation within five 
working days of the incident. Using this requirement as a guideline, we 
believe that the 15 calendar day timeframe will provide a facility with 
about 7-10 calendar days to make necessary corrections after the five 
working day period in which facility must have completed its 
investigation of certain alleged violations currently specified in the 
regulations.
    To the extent that systemic changes are required to prevent 
reoccurrence, the 15 day timeframe will permit more time for facilities 
to design and implement such systemic reform. To the extent that a 
facility has an effectively functioning quality assurance and 
performance improvement system, then 15 days is more likely to be a 
feasible timeframe within which to take remedial action. At this time 
we have elected not to use the discretion afforded in the statute to 
permit an even longer time period for correction because we believe 
that prompt action should always be taken to resolve deficiencies. For 
the same reason we chose to apply the maximum reduction permitted under 
the statute for a civil money penalty reduction when prompt action is 
indeed taken, so that the final rule provides that CMS will reduce a 
civil money penalty (if one were imposed) by the full 50 percent, as 
long as the requirements specified in Sec.  488.438(c)(2) are met.
    Comment: Several commenters expressed concern that offering a 50 
percent reduction for self-reporting and prompt correction would result 
in an increase of facilities over-reporting to ``head off'' civil money 
penalties. This would result in an increase to an already overburdened 
State workload.
    Response: We note that the regulations at Sec.  483.13 already 
require a facility to report specific actions and violations involving 
mistreatment, neglect or abuse, and misappropriation of resident 
property. While we acknowledge that offering a 50 percent reduction for 
self-reporting and prompt correction may result in an increase of 
facilities over-reporting, we expect that as facilities gain experience 
and knowledge regarding self-reporting any increase to the State 
workload will be mitigated. We also hope that any other increased 
reporting may be balanced by more timely and assertive corrective 
action by facilities, as well as improved care for residents.
    Comment: Several commenters asked that we define ``previous year'' 
in the requirement that a 50 percent reduction is not allowable if the 
civil money penalty is being imposed for a repeated deficiency that 
received a civil money penalty reduction in the previous year. Another 
suggestion was made to eliminate ``previous year'' altogether and apply 
CMS's current definition of ``repeat deficiency.''
    Response: We accept the comment to eliminate ``previous year'' and 
to apply CMS's definition of ``repeated deficiencies'' and have revised 
Sec.  488.438(c)(2)(v) accordingly. Current regulations at Sec.  
488.438(d)(3) define repeated deficiencies as ``deficiencies in the 
same regulatory grouping of requirements found at the last survey, 
subsequently corrected, and again found at the next survey.'' The State 
Operations Manual (SOM) at section 7516.3 provides further 
clarification that repeated deficiencies are those deficiencies in the 
same regulatory grouping that are found at the last standard or 
abbreviated standard

[[Page 15112]]

survey, corrected, and then found again at the next standard or 
abbreviated standard survey. Using this definition is consistent with 
both existing regulation and the Affordable Care Act time frame.
    Comment: One commenter asked what role the State would have outside 
of its existing functions with regards to the self-reported 
deficiencies.
    Response: The State's role with regards to receiving and processing 
self-reported incidents will not change. However, CMS does intend to 
implement system changes to CMS's Automated Survey Processing 
Environment (ASPEN) that will allow States to indicate when a survey is 
the result of self-reporting. The planned ASPEN changes will also allow 
a notation to be included about whether or not a 50 percent reduction 
was applied to a civil money penalty.
    Comment: A commenter asked that when multiple per instance civil 
money penalties result from self-reporting, does the 50 percent 
reduction apply to the total, cumulative civil money penalty amount or 
to each individual civil money penalty instance?
    Response: The 50 percent reduction will apply only to civil money 
penalties that meet the requirements as defined by Sec.  488.438(c). 
Sections 488.438(c)(2)(iv) and (v) specify that the noncompliance that 
was self-reported and corrected did not constitute a pattern of harm, 
widespread harm, immediate jeopardy, or result in the death of a 
resident; and, the civil money penalty was not imposed for a repeated 
deficiency that previously received a civil money penalty reduction 
under this section. Each per instance civil money penalty would be 
evaluated individually based on the above criteria. All civil money 
penalties meeting all the requirements, whether one or multiple per 
instance civil money penalties, would receive the 50 percent reduction.
    Comment: Several commenters expressed the opinion that the 50 
percent reduction would never go into effect as the corrected 
noncompliance at scope and severity levels of D, E and G would be 
considered past noncompliance which are rarely, if ever, subject to 
civil money penalty imposition.
    Response: We agree that civil money penalties would rarely be 
imposed for deficiencies cited as past noncompliance at the scope and 
severity levels of D, E and G. In the case of deficiencies cited at the 
``E'' level, this is considered to be a ``pattern'' of harm and would 
not be eligible for the reduction in any case. If the noncompliance is 
serious, although a scope and severity level has not been determined, 
we want to reinforce the need for timely correction, hence the 15 day 
timeframe for correction of the noncompliance.
    Comment: One commenter suggested that we add language indicating 
that, in order to be eligible for a 50 percent reduction, an additional 
requirement should be that ``the facility must have met mandatory 
reporting requirements as set forth by Federal law or regulation and 
any pertinent State law.''
    Response: We concur with the commenter. We believe that a facility 
must have met mandatory reporting requirements as set forth by Federal 
and State law in order to be eligible for a 50 percent reduction and 
therefore, we have revised Sec.  488.438(c)(2) by adding the following 
new subsection:

    (vi) The facility has met mandatory reporting requirements for 
the incident or circumstance upon which the civil money penalty is 
based as required by Federal law and State laws.

    Comment: One commenter expressed concern about the imposition of 
any civil money penalty when a facility has self-reported 
noncompliance. They further stated that the proper incentive to self-
report should be that no punitive action will be taken (i.e., no 
deficiency should be cited and no civil money penalty imposed) so that 
the facility can openly review systems, policies and procedures, and 
educational needs with the goal of improving care and quality of life 
for and with residents.
    Response: We do not agree with the commenter. To participate in the 
Medicare and Medicaid programs, long term care facilities must be 
certified as meeting Federal participation requirements. There is an 
expectation that providers remain in compliance with all participation 
requirements. The regulations emphasize the need for continual, rather 
than cyclical, compliance and the enforcement process mandates that 
policies and procedures be established to promptly remedy deficient 
practices and to ensure that correction is lasting. Specifically, 
facilities must take the initiative and responsibility for continually 
monitoring their own performance to sustain compliance. When, through a 
survey, it is determined that a facility is not meeting these minimum 
requirements for participation in one or both programs, enforcement 
remedies may be imposed in order to encourage prompt compliance with 
participation requirements as well as to promote the continued 
rendering of quality health care in a safe environment. This is 
regardless of whether noncompliance is self-reported or not. It is 
important to note that the participation requirements are the minimum 
health and safety standards that providers are required to meet and 
failure to meet these requirements may lead to the imposition of an 
enforcement remedy, such as a civil money penalty. CMS and the States 
have a statutory responsibility to identify all noncompliance, 
regardless of whether or not the noncompliance was self-reported. 
Additionally, it is important to note that imposition of a civil money 
penalty for current or past noncompliance, whether or not self-
reported, is not a new remedy option, but rather was established by the 
nursing home reform changes of the Omnibus Budget Reconciliation Act of 
1987 (OBRA '87) (Pub. L. 100-203) and is a less severe alternative to 
termination from participation in Medicare, Medicaid or both programs.
    Comment: One commenter expressed concern that the new self-
reporting provision would require States to inspect a facility twice 
within a ten day period; once to determine noncompliance and again to 
determine correction. This would increase pressure on State time and 
resources, significantly affecting the State's survey and certification 
operations.
    Response: In very limited circumstances, some complaints or 
reported incidents of noncompliance would not warrant an on-site 
survey, especially if an alternative method of determining the 
facility's compliance will suffice. For example, a facility providing 
verifiable, written evidence of facility repairs being completed could 
possibly be considered by a surveyor to be sufficient to determine that 
a facility indeed made the required repairs. In the proposed rule we 
specified that correction of a deficiency must occur within ten days of 
identification of the noncompliance. However, as we noted above, in 
this final rule we have extended this timeframe for facilities to 
correct self-reported noncompliance at Sec.  488.438(c)(2)(ii) but we 
do not always require the State to verify correction within this same 
timeframe.
    Comment: A few commenters argue that many States require self-
reporting of events well before a facility has the opportunity to self-
investigate and determine, if in fact, noncompliance has occurred.
    Response: A State's own self-reporting requirements are enforced by 
the State and fall outside the scope of this regulation.
    Comment: One commenter questioned whether the 50 percent reduction 
applied to State-operated facilities. They further requested that CMS 
consider the

[[Page 15113]]

possibility of adding a provision that allows for a similar reduction 
for facilities where the civil money penalty is State-imposed.
    Response: The proposed regulation states that ``When CMS determines 
that a SNF, SNF/NF or NF-only facility subject to a civil money penalty 
imposed by CMS * * *'' State operated facilities are eligible for this 
reduction only when they are subject to a civil money penalty imposed 
by CMS. While we appreciate the suggestion that this provision also 
apply when the civil money penalty is State-imposed, there is currently 
no statutory authority for such application.
    Comment: One commenter asked for CMS to clarify whether facilities 
must self-report to the State survey agency or to CMS. They also asked 
how the Regional Offices would be notified of the self-report.
    Response: As currently provided in Sec.  483.13(c)(2), the facility 
would self-report to the State survey agency. The State survey agency 
would be responsible for notifying the appropriate CMS regional office 
of this self-report using currently existing procedures.
    Comment: We received a few comments asking for examples of specific 
self-reporting case scenarios.
    Response: Any specific scenarios would be fact-driven and dealt 
with on a case by case basis. However, additional guidance regarding 
self-reporting will be provided in the State Operations Manual.
    Comment: A few commenters ask that we define ``promptly''.
    Response: As noted above, the revised proposed regulation at Sec.  
488.438(c)(2)(ii) specifies that correction of the self-reported 
noncompliance is considered to be prompt if it is corrected either 
within 15 calendar days from the date that the circumstance or incident 
occurred or ten calendar days from the date that the civil money 
penalty was imposed, whichever occurs first.
    Comment: One commenter asked what safeguards would be in place to 
prevent facilities from misrepresenting their prompt compliance.
    Response: The State survey agency will follow existing procedures 
and guidance for determining that a facility meets all federal 
participation requirements. Surveyors are trained and qualified to 
determine a facility's compliance with the participation requirements 
and they will continue to do so. The surveyors will survey/verify 
whether or not a provider that self-reported a deficient practice was 
able to correct the practice within the specified timeframe and the 
State agency will inform the CMS regional office of its findings, who 
will then make the decision as to whether or not an imposed civil money 
penalty should be reduced by 50 percent.
    Comment: One commenter asked if ``promptly corrected'' include 
immediate jeopardy deficiencies that have been removed during the 
survey.
    Response: No. If the civil money penalty is imposed for 
deficiencies which meet the criteria established in proposed Sec.  
488.438(c)(2), the civil money penalty will be eligible for a 50 
percent reduction. If the civil money penalty was imposed for a 
deficiency cited at the scope and severity level of immediate jeopardy, 
section 6111 of the Affordable Care Act will not permit that penalty 
amount to be reduced by 50 percent. Section 488.438(c)(2)(iv) specifies 
that the noncompliance that was self-reported and corrected cannot 
constitute a scope and severity level of immediate jeopardy.
    Comment: One commenter suggested that CMS clarify when the 
requirements for self-reporting trigger an investigation, that facility 
culpability is not automatically presumed, and that all self-reported 
occurrences do not result in a deficiency and imposition of a remedy.
    Response: As we noted in a response above, in limited circumstances 
some self-reporting may not trigger a survey and/or the imposition of a 
remedy. Determinations about whether or not a deficiency exists will 
continue to be made as they are now, on a case-by-case basis.
    Comment: One commenter suggested that the proposed rule did not 
give facilities a meaningful incentive to self-report and that it gives 
CMS a road map to impose penalties that CMS does not presently have.
    Response: The purpose of the regulation is to give nursing homes an 
incentive to self-report and promptly correct suspected deficient 
practices. While it is true that when a nursing home self-reports there 
is a greater likelihood that CMS will be on notice of the possibility 
of deficient practices, however the determination of noncompliance and 
the citation of deficiencies relies on evidence and documentation. CMS 
must maintain the balance between its resources to address 
noncompliance resulting from self-reported circumstances and the 
ability to manage the statutorily mandated survey, certification and 
enforcement process.
    Comment: Several commenters disagreed with the proposed rule's 
assertion that a facility could not receive both a 50 percent reduction 
for self-reporting and prompt correction and a 35 percent reduction for 
waiving the right to appeal an enforcement action. They note that there 
is nothing in the statute that would preclude a facility from receiving 
both.
    Response: The current 35 percent reduction for waiving the right to 
a hearing found at Sec.  488.436(b) was implemented under CMS's general 
rulemaking authority under Sec.  1102 of the Act, and not as a result 
of a specific statutory directive. There is no evidence that Congress 
intended these new provisions under the Affordable Care Act to be 
cumulative such that a facility could possibly receive up to an 85 
percent total reduction of an imposed penalty (i.e., 35 percent for 
waiving an appeal and 50 percent for self-reporting and prompt 
correction). Indeed, Congress established a specific ceiling on the 
penalty amount that can be reduced by the Secretary, which is ``not 
more than 50 percent.'' To interpret this provision as the commenters 
suggested would render the enforcement remedy of imposing a civil money 
penalty meaningless. The purpose of a civil money penalty, indeed of 
all available enforcement remedies, is to protect residents from 
inadequate care and to motivate providers to promptly comply with the 
participation requirements and provide quality services.
    The new authority established under section 6111 of the Affordable 
Care Act provides that the reduction for self-reporting and prompt 
correction of noncompliance could be less than 50 percent. However, 
rather than utilize a lower percentage, we have exercised the full 
discretion permitted under the law to specify that a civil money 
penalty reduction will be at the full 50 percent, rather than a lesser 
amount, so as to provide the maximum incentive to a facility to 
promptly correct problems it has identified. By allowing the full 50 
percent reduction, we are reinforcing the incentive for a facility to 
continually invest in its program evaluation and improvement. While 
providers are still able to choose to receive the 35 percent reduction 
for waiving their hearing rights under the specified procedures, this 
can only be done if they have not already received the 50 percent 
reduction provided under this rule.
    Therefore, at proposed Sec.  488.436(b)(1) we specify that in order 
to receive the 35 percent reduction under Sec.  488.436, a provider 
shall not have received the 50 percent reduction specified by Sec.  
488.438.
    Comment: One commenter suggested that CMS define ``self-report'' to 
mean a voluntary written report to the State survey agency that the 
facility has identified and corrected potential

[[Page 15114]]

noncompliance with a requirement for participation.
    Response: While we appreciate the comment, the State survey agency 
will use its discretion to determine if and/or when information self-
reported by a facility should trigger an on-site survey for determining 
if noncompliance exists. There may be limited circumstances where a 
written report may be sufficient for the State survey agency, but this 
does not apply to all. Self-reported incidents would be processed 
similar to complaints received by the State survey agency. For 
complaints that are not at a level of immediate jeopardy or actual 
harm, the state survey agency decides, based on information received 
about the complaint, whether to investigate the complaint on-site 
(i.e., conduct a survey), perform a desk review of the complaint, or 
refer it to a more appropriate agency.
    Comment: One commenter requested that we define ``repeat 
deficiency'' to mean a repeated instance of the violation of the same 
regulation which formed the basis of the civil money penalty.
    Response: Repeated deficiencies are defined in the regulations at 
Sec.  488.438(d)(3) as ``deficiencies in the same regulatory grouping 
of requirements found at the last survey, subsequently corrected, and 
found again at the next survey.'' We have concluded that applying this 
definition to the 50 percent reduction provision would maintain maximum 
consistency with current Federal regulations. Facilities unwilling or 
unable to maintain and sustain compliance with the same participation 
requirements over this period of time should not be benefited by a 
reduced civil money penalty amount.
    Comment: One commenter suggested that any civil money penalty 
reduction be conditioned on the facility fully cooperating with any 
survey and other follow-up to the self-reporting. In other words, for a 
facility to receive a reduction in a civil money penalty, the facility 
would have to promptly provide any related documentation, access to 
staff, and the facility staff could not misrepresent to surveyors any 
issue raised by the self-reporting.
    Response: While we appreciate the comment, we would expect that 
participating facilities would be fully cooperative with the survey 
process whether it was triggered by self-reported information or for 
any other reason. Absence of evidence that prompt correction occurred 
and that the facility is in compliance with the applicable requirements 
upon which the civil monetary penalty was based would, in and of 
itself, preclude CMS from granting the penalty reduction. The lack of 
facility cooperation in the survey process would rebound to the 
disadvantage of the facility itself to the extent that it impaired a 
positive finding of prompt self-correction and present compliance.
    3. Opportunity for an Independent Informal Dispute Resolution 
Process.
    Sections 6111(a) and (b) of the Affordable Care Act add new section 
(IV)(aa) to sections 1819(h)(2)(B)(ii) and 1919(h)(3)(C)(ii) of the 
Act, which provides a facility with the opportunity to participate in 
an independent informal dispute resolution process if civil money 
penalties have been imposed against the facility, subject to (IV)(cc). 
When an independent informal dispute resolution is offered, such offer 
will be provided to a facility not later than 30 days after the 
imposition of the civil money penalty and must generate a written 
record prior to the collection of the penalty.