Importance of Licensure Compliance in Residential Care Facilities

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This presentation delves into the critical role of licensure compliance in ensuring the success and viability of residential care facilities. The focus is on the Office of Residential Care Facilities' (ORCF) perspective, emphasizing the significance of maintaining provider status/licenses in securing funds for rent/mortgage payments. The session covers topics such as SNF survey inspections, lenders' requirements, oversight of nursing home surveys, and regulatory standards set by CMS for facilities receiving Medicare and Medicaid funding.

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Translating State Translating State Inspections: The Inspections: The ORCF Perspective ORCF Perspective The Office of The Office of Residential Residential Care Facilities Care Facilities U.S. Department of Housing and Urban Development Regina Casabal & Mary Walsh Eastern Lenders Conference Philadelphia, PA March 13 & 14, 2013 1

OFFICE OF RESIDENTIAL CARE FACILITIES INSURES REGULATED SKILLED NURSING AND ASSISTED LIVING FACILITIES 2

LICENSURE COMPLIANCE IS CRITICAL IN ENSURING SUCCESS OF THE PROPERTY OVER THE LIFE OF THE SECTION 232 MORTGAGE. 3

Office of Residential Care Facilities (ORCF) Takes licensure compliance very seriously Without Provider Status/License there are no funds available to make rent/mortgage payments ORCF currently utilizes tools to monitor survey compliance which reduce risk to our portfolio ORCF will continue to analyze deficiencies, compliance issues, and remedies that could place the facility at risk to lose their provider status or not support operations. 4

Topics Covered During this Session: Overview of SNF Survey Inspections & Process Lenders Requirements for submittal of 223f and 223a7 as it pertains to surveys A Lender s Perspective on Oversight of Nursing Home Surveys TEAM TSI Dashboard Training Questions will be taken after the session to allow adequate time for the topics covered 5

CMS The Center for Medicare & Medicaid Services (CMS), a part of the federal government, certifies facilities to receive payments from Medicare and Medicaid. CMS contracts with each state to provide nursing home surveys to ensure Medicare and Medicaid quality and performance standards are being met. 6

CMS (continued) The survey covers various aspects such as resident life, quality of care, safe and sanitary food preparation processes, staff/resident interactions, environment, policy and procedures and, among numerous others, abuse and neglect. If the regulatory standards are not being met, as shown through the survey process, then CMS can impose penalties, remedies or sanctions and possibly revoke all Medicare & Medicaid funding. 7

Overview of Inspections & Process Several Different Types of Surveys/Inspections: Annual Health Inspections (every 9-15 months) Life Safety Inspections (every 9-15 months) Complaint Surveys Special Focus Surveys (every 6 months) 8

Survey Overview: Annual Surveys Comprised of an inspection team (trained inspectors which typically include a registered nurse, a license or certified social worker and a certified life safety code inspector). Are unannounced and performed 24 hours a day/ 365 days a year. Generally lasts a 3-5 days which can include non business hours and/or weekends. 9

Survey Overview Continued The survey team follows the survey process and evaluates whether the facility is meeting individual resident needs and providing quality of care as defined by CMS. The survey team routinely cites facilities for noncompliance of a Regulation. If scope and severity of severe deficiencies are found that have risen to the level of harm (G, H or I) or immediate jeopardy (J,K, L,) then the survey may be extended. 10

Life Safety Inspections Typically done at the time of the Annual Inspection. All Skilled Nursing Homes, to be a Medicare & Medicaid Provider, must be in compliance with the 2000 edition of the Life Safety Code (LSC). Can substitute for the REAC Inspection for Skilled Nursing Homes. 11

Life Safety Inspections The survey team routinely cites facilities for noncompliance of a Regulation. Severe deficiencies are found at a scope and severity under the citations at a level of harm (G, H or I) or immediate jeopardy (J,K, L,). Any G Level 3 or higher within last 3 years must be addressed in Lender Narrative. 12

Life Safety Inspections (continued): ORCF is monitoring Life Safety Inspections at Harm Level (G or higher) citations closely as this was substituted for the REAC Inspections for Skilled Nursing Homes. 13

COMPLIANCE: If the CMS regulatory standards are not being met, as shown through the survey process, then CMS can impose penalties, remedies or sanctions and possibly revoke all Medicare & Medicaid funding. 14

CMS Scope and Severity Grid Helps assist in understanding scope and severity of citations. Level 3 Harm Level Level 4 Immediate Jeopardy Levels coordinate with Star Rating Levels 15

Survey Correspondence Letters from CMS/State received regarding: Not in Substantial Compliance Civil Money Penalties (due to Harm or Immediate Jeopardy) Denial of Payment/Ban on Admissions Date of Termination if unable to come into Compliance 17

Complaint Surveys Unannounced Following up on complaints made by residents, family members, friends, etc. Typically one or two surveyors Follow the same standards for the annual survey 18

Special Focus Designation No 223f Firm Applications will be accepted for facilities that are currently designated as a Special Focus Facility. For 223a7 Firm Applications for a facility with a current Special Focus designation, discuss proposal in advance of application submission with the assigned Account Executive (Risk Mitigation Branch). 19

Special Focus Designation: Program offered by CMS for facilities with a history of serious quality issues. Meant to stimulate the project to improve their quality of care to residents. Surveyed every 6 months. Special Focus Categories: New Improving Not Improving Graduated Terminated 20

Special Focus Designation (continued): New: recently added to the Special Focus Program Improving: Advances to this status once meeting acceptable surveys (less than E or higher) as outlined by CMS Not Improving: Not meeting acceptable survey outcomes (receiving E or higher on surveys) Enforcement becomes more stringent Termination from Medicare & Medicaid Program possible if surveys do not Improve 21

Special Focus Designation (continued): Graduated status: Received 2 consecutive Improving surveys. Termination: Did not improve during Special Focus surveys. No longer eligible to participate as a Medicare and Medicaid Provider 22

Substantial Compliance Notification Facility has cleared all citations Facility is in Substantial Compliance Possibly includes Civil Money Penalties Lender needs to follow up and ensure property can support penalties and impact to financials. 23

CMS Star Rating ORCF reviews all elements of the Star Rating. When submitting applications please include in the Lender s Narrative all star rating under each category. 4 Star Ratings: Overall Health Inspection Staffing Quality 24

Lender Narrative Executive Summary/Risk Factors Medicare.Gov Star Rating (# of stars) Place ALL 4 star ratings in the Lender s Narrative under the above category 4 Star Ratings Includes: Overall Health Inspection Staffing Quality 26

Lenders Requirements for 223f and a7s submittal pertaining to the surveys: If either Overall and/or Health Inspection Star Rating has a 1 star rating and/or Special Focus and/or High/Critical TSI report then submit the below: Submit a lender summary review of a minimum of past 3 years survey/CMS remedy history. DO NOT SUBMIT SURVEYS!! Submit Improvement Plans for a Goal of Improving each category to a minimum of 3 stars . This is NOT the Plan of Correction. Submit Improvement Plans for a Goal of not achieving a G or higher going forward If Special Focus, submit Improvement Plans on timeline to Graduate from Special Focus. Lender to give recommendations based on review of past survey history and submitted improvement plans Lender to Monitor Star Rating until Star Rating Improves 27

Life Safety Inspections Any G level 3 or higher deficiency or higher within the last year must be addressed in the Lender Narrative. 28

Lenders Requirements for 223f and a7s submittal pertaining to the surveys: If Life Safety Inspection has received a Harm Level or higher (level 3 or higher/G or higher) then submit the below: Submit a lender summary review of a minimum of past 3 years survey/CMS remedy history. DO NOT SUBMIT SURVEYS!!. Submit Improvement Plans for a Goal of not achieving a G or higher going forward Lender to give recommendations based on review of past survey history and submitted improvement plans 29

Lenders Requirements for 223f and a7s submittal pertaining to the surveys (con t): Lender to review and submit a summary of all Civil Money Penalties, Denial of Payment, Termination, etc. Lender to submit recommendations on financial/operational review, if property can support CMS remedies and if plans are in place to improve survey performance. 30

Lenders Requirements for 223f and a7s submittal pertaining to the surveys (con t): Lender to request if there has been a G or higher citation in the last 6 months or notification of Special Focus Status that is not shown in the CMS.gov website, Star Rating or TSI report. If G or higher obtain summary, compliance letter, remedies and submit recommendations on current surveys and remedies, past surveys, remedies, improvement plans and evaluate if operations can support remedies and submit lender s recommendations on ability to improve survey performance going forward. Include State/CMS current and past history of Remedies Impact to Operating Financials Include Compliance Letter Include Special Focus, State Monitored, etc. 31

Underwriting (223f and a7s) and Incorporating into Lender s Narrative Utilize the Lender s Narrative to provide detail for all survey/star rating/life safety issues. List all Star Ratings in Each Category (Should be 4 Star Ratings Listed) List Risk Factors associated with Star Ratings/Survey Issues/Life Safety and Financial Issues that are created due to low star rating/survey issues/life safety/Civil Money Penalties (a7 s please place under compliance). List Risk Factors considering all Star Rating issues/survey issues, Life Safety Issues, Improvement Plans Requested, Summary and Recommendations. 32

Lenders Narrative Propose Special Conditions include when necessary that may include: Improvement Plans Risk Management Program Change in Operator/Management Company/Utilization of Consultants Oversight of Surveys until 3 star minimum is seen in each category Request of future Improvement Plans if below 3 stars is seen/Harm Level or higher continues. Lender to notify AE/HUD. Request possible REAC inspection if concerns over Life Safety Inspection results. 33

Lenders Narrative Conclusion Include Conclusion and Lender s Recommendations regarding Star Rating for each category/Survey Issues, Life Safety Inspections at G Level 3 or Higher citations, Licensure Issues, Financial Impact, the Improvement Plans received and recommendations for long term viability of this license and long term viability of operations/financials going forward. 34

Tools for Oversight Surveys CMS Star Rating CMS Special Focus TEAM TSI Dashboard Contact Facility Directly Lender s Corner 35

Lenders Corner New Lender s Corner available on HUD.gov portal Tool for lenders to use for the latest training opportunities Portal access offered by the ORCF for current HUD insured properties http://portal.hud.gov/hudportal/HUD?src=/federal_ho using_administration/healthcare_facilities/section_232 /lean_processing_page/Lender_Corner 36