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[Federal Register Volume 78, Number 53 (Tuesday, March 19, 2013)]
[Rules and Regulations]
[Pages 16795-16806]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-06276]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 483, 488, 489, and 498

[CMS-3230-F]
RIN 0938-AQ09

Medicare and Medicaid Programs; Requirements for Long-Term Care 
(LTC) Facilities; Notice of Facility Closure

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

ACTION: Final rule.

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SUMMARY: This rule adopts, with technical changes, the interim rule 
that published February 18, 2011. That interim rule revised the 
requirements that a long-term care (LTC) facility must meet in order to 
qualify to participate as a skilled nursing facility (SNF) in the 
Medicare program, or a nursing facility (NF) in the Medicaid program. 
The requirements implemented section 6113 of the Patient Protection and 
Affordable Care Act to ensure that, among other things, in the case of 
an LTC facility closure, individuals serving as administrators of a SNF 
or NF provide written notification of the impending closure and a plan 
for the relocation of residents at least 60 days prior to the impending 
closure or, if the Secretary terminates the facility's participation in 
Medicare or Medicaid, not later than the date the Secretary determines 
appropriate.

DATES: Effective on April 18, 2013.

FOR FURTHER INFORMATION CONTACT:
Mary Collins, (410) 786-3189.
Ronisha Davis, (410) 786-6882.
Lisa Parker, (410) 786-4665.

SUPPLEMENTARY INFORMATION:

I. Background

A. Overview

    According to the Centers for Medicare & Medicaid Services (CMS) 
data, as of October 2011, there were 15,720 long-term care (LTC) 
facilities (commonly referred to as nursing homes) in the United 
States. These facilities are generally referred to as skilled nursing 
facilities (SNFs) in the Medicare program and as nursing facilities 
(NFs) in the Medicaid program. For the past decade, CMS Survey and 
Certification Tabulation of Certification and Survey Provider Enhanced 
Reporting (CASPER) data have shown a decline in the number of nursing 
homes, from 17,508 in 1999 to 15,720 in 2011. In 2010, there were 141 
nursing home closures. In 2011, there were 90 closures.
    LTC facility closures have implications related to access to care, 
the quality of care, availability of services, and the overall health 
of residents. Therefore, having an organized process that facilities 
must follow in the event of a nursing home closure will protect 
residents' health and safety, and make the transition as smooth as 
possible for residents, as well as family members and facility staff.
    On February 18, 2011, we published in the Federal Register an 
interim final rule with comment period, entitled ``Requirements for 
Long-Term Care (LTC) Facilities; Notice of Facility Closure'' (76 FR 
9503). In that rule, we revised the current requirements for LTC 
facilities under the provisions of section 1128I(h) of the Social 
Security Act (the Act), as added by section 6113(a) of the Patient 
Protection and Affordable Care Act (Pub. L. 111-148, March 23, 
2010)(Affordable Care Act). The new statutory provision requires us, 
among other things, to impose sanctions on the administrator of an LTC 
facility for failure to provide proper notice to specified parties, 
including CMS, that the facility is about to close.

B. Legislative History and Statutory Background

    Sections 1819(b)(1)(A) of the Act for SNFs and 1919(b)(1)(A) of the 
Act for NFs both state that a SNF/NF must care for its residents in a 
manner and in an environment that will promote maintenance or 
enhancement of the quality of life of each resident.
    Sections 1819(c)(2)(A)(vi) and 1919(c)(2)(A)(vi) of the Act state 
that in general, with certain specified exceptions, a SNF/NF must 
permit each resident to remain in the facility and must not transfer or 
discharge the resident from the facility, except under specified 
circumstances, including, at clause (vi), when the facility ceases to 
operate.

[[Page 16796]]

    As described in detail in the preamble of the February 18, 2011 
interim final rule, section 6113 of the Affordable Care Act added 
subsection 1128I(h) to the Act, setting forth certain requirements for 
LTC facility closures, effective March 23, 2011. We issued this rule in 
the form of an interim final rule because we believed delaying 
implementation would continue to cause unjustified harm to LTC facility 
residents, families and visitors, and to meet the March 23, 2011 
statutory deadline for implementation (76 FR 9508).

II. Health Disparities

    In the February 18, 2011 interim final rule, we discussed our goal 
of addressing health care disparities (76 FR 9505). We noted that 
research has extensively documented the pervasiveness of vulnerable 
populations which can be defined by race/ethnicity, socioeconomic 
status, geography, gender, age, disability status, sexual orientation, 
and other factors. Although there has been much attention at the 
national level to ideas for reducing health disparities in vulnerable 
populations, we remain vigilant in our efforts to improve health care 
quality for all persons by improving health care access and by 
eliminating real and perceived barriers to care that may contribute to 
less than optimal health outcomes for vulnerable populations.
    We specifically requested comments in regard to how our revised LTC 
facility closure requirements could be used to address disparities 
among facility residents.
    The comments we received on this provision and our responses are 
set forth below.
    Comment: Several commenters encouraged CMS to review a number of 
policies and make changes that would have a positive impact on health 
disparities. One commenter encouraged CMS to review disparate treatment 
of all the populations that were identified in the preamble of the 
regulation and provide the appropriate information and support that 
would improve access to culturally competent care, language access, 
legal and counseling services. The commenter suggested that CMS also 
work with the patient advocacy community.
    Another commenter suggested that CMS examine all of the facilities 
owned by the provider to determine whether there are differences in the 
quality of care provided, including significant differences between 
predominantly Caucasian and predominantly minority facilities.
    Other commenters suggested that CMS should require more monitoring 
of facility finances, following up on all indicators of financial 
problems through special surveys of compliance and financial audits. It 
was also suggested that the concentration of Medicaid beneficiaries in 
a small number of facilities would be reduced if CMS clarified that 
financial screening is illegal under existing law. Another commenter 
recommended CMS issue new guidance to State Survey Agencies of existing 
conditions of participation that prohibit discriminatory admissions 
practices and provide training for State Survey Agencies on how to 
identify discriminatory practices by facilities.
    Response: We appreciate the comments received on this very 
important issue. CMS is committed to addressing health care 
inequalities for racial and ethnic minorities that rely on Medicare and 
Medicaid for quality health care. We will consider these comments in 
the development of future regulations.

III. Provisions of the Proposed Regulations and Analysis of and 
Responses to Public Comments

    In response to the February 18, 2011 interim final rule, we 
received 15 public comments. Interested parties that submitted comments 
included individuals, advocacy organizations, and industry 
associations. In this final rule, we provide a summary of each 
provision, a summary of the public comments received and our responses, 
and any changes to the interim final rule we are implementing as a 
result of comments received.

A. Transfer and Discharge (Sec.  483.12(a))

Timing of Notice
    We revised Sec.  483.12(a)(5)(i), Timing of the Notice, to 
accommodate the closure notice provisions of Sec.  483.12(a)(8) and 
Sec.  483.75(r)(1)(i). The February 18, 2011 interim final rule 
requires the administrator of a facility to provide written 
notification of a facility's closure to specified individuals, 
including facility residents, at least 60 days prior to the date of a 
voluntary closure. This 60-day notice requirement is an exception to 
the general 30-day advance notice requirement governing transfer and 
discharge of individual patients from an LTC facility. The comments we 
received on this provision and our responses are set forth below.
    Comment: One commenter requested clarification regarding the 
interaction between existing State policies (where applicable) and 
Federal regulations when the State requires no less than 60 days 
notice. The commenter stated that many States already have notification 
of closure requirements in place, and expressed concern that in those 
States, a nursing facility administrator will be required to complete 
two notifications: one consistent with State law and regulations and 
one consistent with Federal law and regulations.
    Response: Only one notification would be required by this 
regulation, either 60 days prior to closure for voluntary closures or 
as the Secretary determines appropriate for involuntary closures. CMS 
does not have authority over State licensure, health, reporting, or 
facility requirements. However, according to Sec.  488.3(b)(3), any 
time a State law applicable to providers or suppliers of Medicaid 
services in that State is more stringent that the Federal requirements, 
as is hypothesized here, CMS must enforce the more stringent State 
requirement as a condition of Medicare payment. For example, if the 
State law requires the administrator of a NF participating in its State 
Medicaid program to provide a 90-day notice of closure, the 
administrator would provide 90 days notice, since it is more stringent 
for compliance with Federal law. Failure to do so would put both its 
Medicaid and Medicare payments at risk. We also note that regardless of 
whether State or Federal regulations provide for a longer notification 
period, no-preemption issue arises because a facility complies with 
both laws by complying with the longer notification period.
Notice of Closure
    We added a new Sec.  483.12(a)(8) to require that, in the case of a 
facility closure, any individual who is the administrator of the 
facility must provide written notification prior to the impending 
closure to the Secretary, the State LTC ombudsman, the residents of the 
facility, and the legal representatives of the resident or other 
responsible parties, as well as provide a plan for the transfer and 
adequate relocation of the residents, in accordance with the new 
section Sec.  483.75(r). As discussed in detail below, in section III. 
B of this preamble, we have revised Sec.  483.12(a)(8) to conform with 
changes to Sec.  483.75(r). The comments we received on this provision 
and our responses are set forth below.
    Comment: One commenter suggested that in the final rule, the LTC 
facility be required to notify the medical director, attending 
physicians and other clinicians who regularly provide healthcare 
services within the LTC facility of that facility's closure.
    Response: We appreciate the commenter's suggestion; however, we do 
not consider it necessary to provide

[[Page 16797]]

additional language in the final rule regarding notices to physicians 
and/or other clinicians providing services to the resident. We believe 
this issue is sufficiently addressed in Sec.  483.12(a)(3)(i), 
``Documentation,'' which requires that when a facility transfers or 
discharges a resident, the resident's clinical records must be 
documented and the documentation must be made by the resident's 
physician. Therefore, a resident's physician and/or other practitioners 
would have received notice of the impending closure because they are 
required to be involved in the discharge plan for the resident. We will 
incorporate language into the State Operations Manual (SOM) to specify 
that a resident's practitioner(s) must be involved as soon as the 
notice of closure has been sent to the residents to assure, as stated 
in Sec.  483.75(r)(3), that the residents would be transferred to the 
most appropriate facility or other setting in terms of quality, 
services and location, taking into consideration the needs, choice, and 
best interests of each resident.

B. Facility Closure--Administrator (Sec.  483.75(r))

    We added a new paragraph (r) to Sec.  483.75, which requires any 
individual who is the administrator of the facility to submit to the 
Secretary, the State LTC ombudsman, residents of the facility, and the 
legal representative of such residents (or other responsible parties) 
written notification of an impending closure at least 60 days prior to 
the date of closure; or, in the case of a facility where the Secretary 
terminates the facility's participation in the Medicare and/or Medicaid 
programs, no later than the date that the Secretary determines 
appropriate for such notification. The language of this paragraph 
parallels that of section 1128I(h) of the Act, as added by section 
6113(a) of the Affordable Care Act. The comments we received on this 
provision and our responses are set forth below.
    Comment: The majority of commenters supported the February 18, 2011 
interim final rule, stating that they believe the rule would improve 
resident notification and facility planning, and would ensure a smooth 
relocation of LTC facility residents in the event of a facility closure 
or relocation.
    Response: We appreciate the support from the commenters on this 
rule. We believe that having a requirement that establishes an 
organized process that facilities must follow in the event of an LTC 
facility closure protects residents' health and safety, and makes the 
transition as smooth as possible for residents, family members and 
facility staff.
    Comment: A few commenters recommended that the final rule define 
the term ``closure.'' Another commenter suggested specific changes to 
the language in Sec.  483.75(r)(1). The commenter suggested that we 
revise the regulation to require that the administrator submit, 
``written notification of an impending closure whenever 10 or more 
residents are likely to be transferred due to any voluntary or 
involuntary change in the status of the license or operation of a 
facility, including but not limited to, a facility closure or voluntary 
or involuntary termination of a facility's Medicaid or Medicare 
certification.'' One commenter recommended that an exception be made to 
the requirement of written notification for unplanned events, such as a 
fire, major storms, or flooding.
    Response: For the purpose of this regulation, ``closure'' means an 
LTC facility that ceases to operate under Sec.  483.12(a)(2)(vi), and 
therefore, is no longer providing care and services to residents. We 
believe that the notification requirements should be met regardless of 
the number of residents likely to be transferred. We do not believe 
that establishing criteria for a minimum number of residents that must 
be affected before the notice requirements apply promotes the highest 
quality of care during what can be a difficult situation. We believe 
that all residents should be made aware of a facility closure in a 
reasonable amount of time, regardless of the size of the facility, as 
this regulation currently requires.
    Regarding unplanned events, current regulations at Sec.  
488.426(a), ``Transfer of residents,'' or closure of the facility and 
transfer of residents, gives a State the authority to transfer Medicare 
and Medicaid patients out of a facility (temporarily or permanently) in 
emergency situations. If the State orders the temporary relocation of 
residents during an emergency, with the expectation that the residents 
will return to the facility, this would not be regarded as a facility 
closure under this requirement and the notification requirements under 
Sec.  483.75(r) would not be applicable. For example, if a facility's 
air conditioning failed during a heat wave, the State could order the 
facility to relocate all of its residents while the problem was being 
investigated, without closing the facility.
    Comment: One commenter suggested that the final rule allow for a 
longer notification period for residents and their families, as well as 
others, in the case of an involuntary closure. A longer notice period 
would give family members time to consider whether a home and 
community-based setting would better meet the LTC facility resident's 
needs than placement in another LTC facility. The commenter further 
recommended that, to the extent possible, the closure notification 
requirement for involuntary terminations should be at least 60 days in 
advance of closure, consistent with the rule for voluntary closures, or 
at a minimum, 30 days, consistent with the transfer/discharge 
provisions at Sec.  483.12(a)(5)(i), unless there is an immediate 
threat to the health and safety of residents that necessitates a 
shorter notification timeframe.
    Response: This regulation does not preclude a facility from 
providing a longer notification period if it chooses. Only the State 
has the authority to close a facility. CMS has authority to terminate 
provider agreements and thereby Medicare payments, as well as the 
Federal Medicaid matching payment to the State. In this case, the 
notification requirements are determined by the Secretary in 
collaboration with the State. In the preamble of the February 18, 2011 
interim final rule, we provided background information regarding how 
the Secretary may determine a date for notification (76 FR 9506).
    Additionally, Sec.  483.75(r)(3) requires that the administrator 
include in the written notification of closure assurances that the 
residents would be transferred to the most appropriate facility or 
other setting in terms of quality, services, and location, taking into 
consideration the needs, choice, and best interests of each resident. 
We believe that this requirement sufficiently addresses the commenter's 
concern about ensuring that the resident's needs are successfully met 
upon relocation to another facility or location.
    Comment: One commenter suggested that in addition to State's 
approving the closure plan prior to notification and overseeing 
closures, LTC facility administrators should also be required to send 
the notice directly to the State Survey Agencies.
    Response: We agree with the commenter that the written notification 
should also be given to the State Survey Agency. The State Survey 
Agency acts on the behalf of the Secretary and the intent of the 
February 18, 2011 interim final rule was to ensure that the 
notification went to the State Survey Agency. Therefore, we are 
revising the regulation at Sec.  483.75(r)(1) to clarify that any 
individual who is the administrator

[[Page 16798]]

of the facility must submit to the State Survey Agency, the State LTC 
ombudsman, residents of the facility, and the legal representatives of 
such residents or other responsible parties, written notification of an 
impending closure. As noted above, we have also revised Sec.  
483.12(a)(8) to clarify that the written closure notification must be 
submitted to the State Survey Agency.

C. New Admissions After Closure Notice (Sec.  483.75(r)(2))

    At Sec.  483.75(r)(2), we require any individual who is the 
administrator of the LTC facility to ensure that the facility does not 
admit any new residents on or after the date, which such written 
notification of facility closure is submitted to the Secretary, the 
State LTC ombudsman, and the residents, and/or their representatives or 
other responsible parties.
    We did not receive any public comments regarding this requirement; 
therefore, we are finalizing Sec.  483.75(r)(2) as published in the 
interim final rule.

D. Closure Notice (Sec.  483.75(r)(3))

    At Sec.  483.75(r)(3), we require that any individual who is the 
administrator of an LTC facility include in the written notice of 
closure, a plan that has been approved by the State for the transfer 
and adequate relocation of the residents by a date that must be 
specified by the State prior to closure. The plan must include 
assurances that the residents will be transferred to the most 
appropriate facility or other setting in terms of quality, services, 
and location, taking into consideration the needs, choice, and best 
interests of each resident.
    In the preamble of the February 18, 2011 interim final rule, we 
expressed our expectation that the closure plan would include 
sufficient detail to identify clearly the steps the facility would 
take, and would specify the individual responsible for ensuring the 
steps were successfully carried out (76 FR 9507). We note that we 
inadvertently omitted language regarding the statutory requirement at 
section 1128I(h)(1)(C) of the Act for State approval of the plan. We 
are correcting the language accordingly in section Sec.  483.75(r)(3) 
of the regulations text in this final rule. The comments we received on 
this provision and our responses are set forth below.
    Comment: Several commenters suggested that the final rule include 
regulations text specifying the minimum requirements for the facility 
closure plan, including information on transfer and discharge rights.
    Response: We appreciate the commenter's suggestion; however, we do 
not believe it is necessary to include specific requirements for the 
plan in the regulation text. We want to allow each LTC facility the 
flexibility to develop a plan that would most effectively protect the 
residents' health, safety, and well-being. We note that we included 
detailed examples of elements of a closure plan in the preamble of the 
February 18, 2011 interim final rule (76 FR 9507). In addition, we 
intend to issue further guidance regarding the elements of a closure 
plan subsequent to the publication of this final rule.
    Comment: One commenter recommended that CMS require the facility 
administrator to share the required relocation plan with residents and 
family members, as well as making it available upon request and/or 
publish the plan on State government nursing home information Web 
sites.
    Response: We appreciate the commenter's suggestion. However, we do 
not believe that sharing the facility's relocation plan with residents 
would be appropriate, since the plan includes information that does not 
directly pertain to the health, safety, and well-being of the residents 
(for example, continuation of appropriate staffing levels and paychecks 
at the facility; method for communicating with staff and/or unions; and 
ongoing provision of necessary supplies, for example, food, linens, and 
utilities). The facility must meet its obligation set out at existing 
Sec.  483.12(a)(4), ``Notice before transfer,'' to provide notice to 
the resident before the transfer or discharge of the resident. Our 
requirements at existing Sec.  483.12(a)(6), ``Contents of the 
notice,'' specifically set out what must be included in the notice of 
transfer given to residents and, if known, a family member or legal 
representative. Since the transfer and discharge requirements are 
tailored specifically to each resident's unique needs, we believe that 
the required information will sufficiently address the commenter's 
concerns.
    Additionally, the Nursing Home Compare Web site is a tool available 
to individuals looking for updated comparative information regarding 
functioning LTC facilities; this information can be utilized during the 
relocation process, and is available online at: http://www.medicare.gov/nhcompare/include/datasection/questions/proximitysearch.asp?bhcp=1.
    Comment: Some commenters expressed concern that CMS was requiring 
the facility closure plan to include a commitment to retain and pay 
employees at the facility until it was closed (76 FR 9507). In 
particular, the commenters were concerned that the administrator might 
be held accountable for civil monetary penalties for any failure to 
adequately staff and pay employees. The commenters observed that unless 
the facility administrator was also the owner, the administrator 
generally would not have authority over, or access to, the funds that 
would be used to pay staff.
    Response: While we expect the LTC facility administrator will be 
able to identify the necessary steps for a successful transfer of the 
residents, we note that the contents of the closure plan described in 
the preamble of the February 18, 2011 interim final rule were examples, 
not requirements (as incorrectly characterized by the commenter). 
Additionally, as mentioned in the preamble of the February 18, 2011 
interim final rule, we expect that the closure plan include sufficient 
detail to clearly identify the steps the facility would take, and the 
individual responsible for ensuring the steps are successfully carried 
out, such as continuation of appropriate staffing levels, and paychecks 
at the facility. We intend to provide more detail on the contents of 
the closure plan in the interpretive guidance.
    Comment: Several commenters requested clarification as to how a 
resident would be assessed for transfer to either an LTC facility or 
other community and home-based settings. Additionally, one commenter 
requested clarification regarding what would happen if admission to any 
of the settings deemed most appropriate for the resident were denied.
    Response: We believe existing requirements at Sec.  483.20(l), 
``Discharge summary,'' should sufficiently address the commenter's 
concerns regarding how a resident would be assessed for transfer. 
According to those requirements, when the facility anticipates 
discharge, a resident must have a discharge summary that includes a 
final summary of the resident's status to include the elements in the 
comprehensive assessment of a resident's needs located in Sec.  
483.20(b). Section 483.20(l) also requires a post-discharge plan of 
care to be developed with the participation of the resident and his or 
her family. The plan of care will assist the resident with adjusting to 
his or her new living environment.
    Additionally, Sec.  483.75(r)(3) requires the LTC facility to 
include in the notice, the plan for the transfer and adequate 
relocation of the residents of the facility by a date that would be 
specified by the State prior to closure, that has been approved by the 
State, including

[[Page 16799]]

assurances that the residents would be transferred to the most 
appropriate facility or other setting in terms of quality, services, 
and location, taking into consideration the needs, choice, and best 
interests of each resident. If admission to any of the settings deemed 
most appropriate for the resident were denied, the facility would still 
be responsible for locating another setting comparable in terms of 
quality, services, and location, taking into consideration the needs, 
choice, and best interests of the resident, in order to comply with the 
requirements of this regulation.
    Comment: One commenter recommended that CMS require that SNFs and 
NFs give residents, to the extent possible, an opportunity to visit 
facilities in advance so that they can choose the facility they would 
like to move.
    Response: This regulation does not prohibit residents of a SNF or 
NF from visiting other facilities in advance. Additionally, existing 
regulations at Sec.  483.12(a)(7), state that a facility must provide 
sufficient preparation and orientation to residents to ensure safe and 
orderly transfer or discharge from the facility. The facility should 
actively involve, to the extent possible, the resident and the 
resident's family in selecting the new residence. Some examples of 
orientation may include trial visits, if possible, by the resident to a 
new location; orienting staff in the receiving facility to the 
resident's daily patterns; and reviewing with staff routines for 
handling transfer and discharges in a manner that minimizes unnecessary 
and avoidable anxiety or depression for the resident.
    Comment: One commenter suggested that the facility's closure plan 
include a requirement to ensure that other nursing homes, including 
those owned by the same company as the facility that is closing, do not 
have access to a resident's record in order to ``cherry pick'' private 
pay residents or those with lighter care needs. Additionally, one 
commenter suggested that the facility's closure plan include 
information on how residents may contact the State's long-term care 
ombudsman and access CMS's Nursing Home Compare Web site since the 
updated data planned for the site will increase its value as a tool for 
residents to select an alternate nursing home in the event of a 
facility closure.
    Response: The selection of an alternate facility is a decision 
collectively made by the resident (or their responsible party) and the 
care planning team. We believe that the provision at Sec.  
483.75(r)(3), which requires the written notice to assure residents 
that they will be transferred to the most appropriate facility or other 
setting in terms of quality, services, and location, taking into 
consideration the needs, choice, and best interests of each resident, 
adequately addresses the commenter's concerns. In addition, to ensure 
that the residents' rights are protected, Sec.  483.75(r)(1) requires 
the ombudsman to be contacted as part of the closure notice. Under the 
Federal Older Americans Act, every State is required to have an 
Ombudsman Program that addresses complaints and advocates for 
improvements in the LTC system (http://www.ltcombudsman.org/).
    Comment: Several commenters offered suggestions to CMS on what 
should be included in the SOM regarding the implementation guidelines 
for this regulation. One commenter suggested that CMS include in the 
SOM that nursing home residents displaced due to a facility closure be 
provided with information about and access to home and community-based 
setting options as appropriate.
    Another commenter suggested that CMS provide additional guidance to 
State Survey Agencies regarding how to use monitors and temporary 
managers more effectively in facility closure situations. Additionally, 
one commenter recommended that the SOM should include guidance related 
to timeframes for completion of all paperwork assuring successful 
resident relocation. Another commenter recommended that CMS include 
guidance regarding post-transfer assessments of the residents' 
emotional health. The commenter stated that an assessment would ensure 
that evaluating the success of the residents relocation would not be 
limited to the mere physical move itself, but would also consider the 
residents' psychosocial adjustment.
    Response: We appreciate the commenters' suggestions regarding 
guidance for surveyors. We will consider these comments when making 
changes to the interpretive guidance.

E. Facility Closure (Sec.  483.75(s))

    At Sec.  483.75(s), we require that the facility have in place 
policies and procedures that will ensure the administrator's duties and 
responsibilities involve providing the appropriate notices in the event 
of a facility closure. In the preamble to the February 18, 2011 interim 
final rule, we noted that the facility will not be sanctioned for 
noncompliance with this rule; however, it may be cited for a deficiency 
during the survey process (76 FR 9507). We are finalizing these 
provisions as set forth in the interim final rule.
    The comments we received on this provision and our responses are 
set forth below.
    Comment: One commenter suggested that CMS withdraw Sec.  483.75(s) 
from the final rule due to its inconsistency with the Congressional 
intent, which is to hold the administrator, not the facility, 
accountable for failure to provide proper notification in advance of a 
facility closure. Alternatively, a few commenters suggested that the 
final rule should establish a process for sanctioning facility owners 
in addition to administrators who do not comply with the closure 
provisions. Some commenters suggested that the provision was 
unnecessary because when a facility decides to close, the rule requires 
the administrator to prepare the closure plan and seek appropriate 
approvals, regardless of whether the facility has policies and 
procedures.
    Response: As we stated in the preamble of the February 18, 2011 
interim final rule, while this provision is not explicitly required by 
section 1128I(h) of the Act, we believe that it is implicitly 
authorized by this section of the Act, which set forth requirements for 
LTC facility closures. Moreover, issuance of this regulatory provision 
is permitted by the general rulemaking authority of sections 
1819(d)(4)(B) and 1919(d)(4)(B) of the Act, which explicitly permits 
the Secretary to issue rules relating to the health, safety, and well-
being of residents, as well as rules concerning physical facilities. 
Additionally, Sec.  483.75(d), Governing body, requires the facility to 
have a governing body, or designated persons functioning as a governing 
body, that is legally responsible for establishing and implementing 
polices regarding the management and operation of the facility. 
Therefore, the facility is responsible for the overall functioning of 
the LTC facility, though it will not be sanctioned for noncompliance 
with this rule, a facility that does not meet the requirements at Sec.  
483.75(s) could be cited for a deficiency during the survey process. We 
continue to believe this level of added protection will ensure that the 
intent of the Congress is implemented and that residents receive 
adequate notice before a facility closure.

F. Transfer of Residents, or Closure of the Facility and Transfer of 
Residents (Sec.  488.426)

    We revised Sec.  488.426, Transfer of residents, or closure of the 
facility and transfer of residents, at Sec.  488.426(b) to include a 
cross-reference to the new requirements at Sec.  483.75(r). We also

[[Page 16800]]

added a new requirement at Sec.  488.426(c) to address the required 
notifications when a facility closes. We are finalizing these 
provisions set forth in the interim final rule.
    The comments we received on this provision and our responses are 
set forth below.
    Comment: A few commenters mentioned that the Affordable Care Act 
requires the notices issued by administrators to include a closure plan 
that has been approved by the State; however, the regulation does not 
establish any process for State review and action on facility closure 
plans. It was suggested that the final rule establish these procedures 
under which States would review and act on proposed closure plans. The 
commenter suggested that CMS prescribe in regulations (rather than 
through sub-regulatory guidance in the SOM) that States will be 
required to ensure safe relocation of residents following their 
facility's closure and that CMS has authority to enforce the 
requirements directly.
    Response: Section 1128(h)(1)(C) of the Act states any individual 
who is the administrator of a facility must include in the notice a 
plan for the transfer and adequate relocation of the residents of the 
facility by a specified date prior to closure that has been approved by 
the State, including assurances that the residents will be transferred 
to the most appropriate facility or other setting in terms of quality, 
services, and location, taking into consideration the needs, choice, 
and best interests of each resident. In accordance with the statute, 
States are required to approve the plan. We expect the State Survey 
Agency to manage the approval process. Thus, we do not believe it is 
necessary to add these requirements to the regulation, but will address 
it in the SOM. In this final rule, we have revised the language at 
Sec.  483.75(r)(3) of the regulations text to incorporate the explicit 
requirement. The regulation text will now read, ``Include in the notice 
the plan, that has been approved by the State, for the transfer and 
adequate relocation of the residents of the facility by a date that 
would be specified by the State prior to closure, including assurances 
that the resident would be transferred to the most appropriate facility 
or other setting in terms of quality, services, and location, taking 
into consideration the needs, choice, and best interests of each 
resident.''

G. Administrator Sanctions: Long-Term Care Facility Closures (Sec.  
488.446)

    As required by section 6113 of the Affordable Care Act, we added a 
new Sec.  488.446, which will potentially subject to sanctions any 
administrator of a facility that fails to comply with the requirements 
at Sec.  483.75(r). We are finalizing these provisions as set forth in 
the interim final rule. The comments we received on this provision and 
our responses are set forth below.
    Comment: Several commenters had concerns that an owner of a nursing 
facility could arrange for the closure of the facility after the 
prescribed timeframe for notification, without knowledge or involvement 
of the administrator, thus exposing the facility administrator to the 
sanction when they were not aware of the owner's plans to close the 
facility. Additionally, commenters requested that CMS consider waiving 
sanctions for administrators that are hired after the decision is made 
to close a facility.
    Response: We agree with the commenters that the administrator may 
encounter a situation where adequate time to submit a notification of 
closure to the specified entities, as required by Sec.  483.75(r)(1), 
was not given. In some cases, an administrator may not have had control 
over implementing the notice procedures. For example, an administrator 
may have been hired to oversee the facility's impending closure, 
although he or she was not present when the decision was made to close 
the facility. The administrator may have been employed less than 60 
days prior to closure. Another possibility is that the facility owner 
may not have even informed the new administrator of plans to close the 
facility. However, the lack of previous involvement does not relieve 
the administrator (at the time of closing) of the responsibility for 
implementing the plan and the procedures as required to the extent 
possible. In these instances, the administrator would be expected to 
provide the closure notice as soon as possible and begin implementing 
the plan for closure, working with the State Survey Agency for 
transferring the residents. The administrator hired to assist with 
closure would be expected to implement the closure plan and work 
closely with the State and CMS to assure that appropriate procedures 
were implemented. From the time that the administrator was made aware 
of the closure, he or she would be responsible for compliance with this 
regulation.
    Additionally, while it was not mandated by the Affordable Care Act, 
we have added Sec.  498.5(m), which allows for appeal rights of an 
individual who is the administrator of a SNF or NF. Therefore, if an 
individual who is the administrator of a SNF or NF is dissatisfied with 
the decision of CMS to impose sanctions, he or she would be entitled to 
a hearing before an Administrative Law Judge (ALJ), to request the 
Departmental Appeals Board review of the hearing decision, and to seek 
judicial review of the Board's decision.
    Comment: A few commenters expressed concerns about the Civil 
Monetary Penalty (CMP) levels being too low, considering that section 
6113 of the Affordable Care Act permits fines of up to $100,000 and 
subsequent exclusion from participating in any Federal healthcare 
programs and suggested increasing the minimum penalty. Another 
commenter recommended enforcing CMPs from $100.00 up to $1,000.00, 
multiplying the amount of the CMP by the number of residents who were 
admitted after written notice of closure was provided to the State. 
Another commenter suggested that those facilities that committed 
multiple offenses should incur all penalties to the fullest extent 
possible, while another commenter requested clarification and/or 
criteria for what would constitute multiple offenses that would result 
in increased amounts of CMPs.
    Response: We believe that the Congress intended for CMS to use 
sanctions as a method to ensure that the statutory requirements are 
enforced. The statutory language that was enacted stated ``up to 
$100,000.'' This language established a maximum limit, but afforded CMS 
the discretion to determine the actual amount of the sanctions. Due to 
the many possible combinations of violations that could be cited, the 
amount of the penalty will be determined based on the survey findings. 
For example, if it is determined that an administrator of record 
completely fails to take the necessary and timely actions to adhere to 
the closure requirements, thus potentially causing harm to residents, 
then the administrator could be subject to additional CMPs. Any 
sanctions that have been levied against an administrator could also be 
reviewed by the State's licensing agency for possible disciplinary 
action, including suspension or termination of the administrator's 
license, in those States that provide for the licensing of LTC facility 
administrators. Interpretive guidelines are being developed that will 
establish criteria for determination of its CMP amounts.
    Comment: One commenter suggested that CMS and State licensing 
agencies consider sharing a percentage of any resultant CMP proceeds 
with any parties that may have directly been injured

[[Page 16801]]

because of failures to notify and/or plan for relocation,
    Response: Existing requirements at Sec.  488.433, ``Civil money 
penalties: Uses and approval of civil money penalties imposed by CMS,'' 
state that 10 percent of the collected CMP funds that are required to 
be held in escrow and that remain after a final administrative decision 
will be deposited with the Department of Treasury. The remaining 90 
percent of the collected CMP funds that are required to be held in 
escrow and that remain after a final administrative decision may not be 
used for survey and certification operations, but must be used entirely 
for activities that protect or improve the quality of care for 
residents. These activities must be approved by CMS and may include, 
but are not limited to: support and protection of residents of a 
facility that closes, time-limited expenses incurred in the process of 
relocating residents to home and community-based settings or another 
facility when a facility is closed or downsized pursuant to an 
agreement with a State Medicaid agency, facility improvement 
initiatives approved by CMS, such as, joint training or facility staff 
and surveyors or technical assistance for facility implementing quality 
assurance and performance improvement program, when facilities have 
been cited by CMS for deficiencies in the applicable requirements. 
While the collected CMPs are not dispersed to the affected parties 
directly, the money will be used to protect and improve the quality of 
care for residents. Therefore, we believe they ultimately will derive 
benefits from the collected CMP funds.
    Comment: A few commenters requested clarification regarding what 
would constitute ``unjustified harm'' to the resident, family, and 
visitors, as mentioned in the preamble to the February 18, 2011 interim 
final rule with comment period cited as a justification for harsher 
administrator sanctions (75 FR 9507). One commenter stated that it was 
not clear how or why the administrator would have any legal obligation 
to third parties such as family members or visitors. A commenter 
suggested that we remove the language in the preamble suggesting that 
the administrator could be subject to additional CMPs if it was 
determined that family members and visitors of the resident experienced 
``unjustified harm'' (75 FR 9507).
    Response: We are clarifying that it was not our intention to make 
an LTC facility administrator personally liable to family members and 
visitors for harm resulting from a failure to notify. We used a 
technical term to describe deficiencies; however, this terminology does 
not create either a Federal or State standard of care. We do not 
believe that any level of harm, whether based on intent or negligence, 
is acceptable.

H. Period of Continued Payments (Sec.  488.450(c))

    We revised Sec.  488.450 by adding a new requirement to provide 
that, in the case of a facility closure, the Secretary may, as 
appropriate, continue to make payments under this title with respect to 
residents of an LTC facility that has submitted a notification of 
closure, during the period beginning on the date such notification is 
submitted and ending on the date, which the resident is successfully 
relocated. We note that in this final rule, we are correcting a 
typographical error in the regulations text. The provision in section 
Sec.  488.450(c)(2) will now read, `` * * * ending on the date on which 
the residents are successfully relocated.''
    The comments we received on this provision and our responses are 
set forth below.
    Comment: One commenter suggested that CMS provide a procedure for 
residents, their representatives, citizen advocacy groups, and the 
State LTC ombudsman to comment on when payments can be terminated.
    Response: We appreciate the commenter's concern regarding 
termination of payment in the event of a facility closure. However, we 
do not believe that any changes in this aspect of the rule are needed 
because the statute and our regulatory requirements address the 
concerns of the commenter. Section 1128I(h)(3) of the Act and 
requirements at Sec.  488.450(c), authorize the Secretary to continue 
to make payments with respect to residents of an LTC facility that has 
submitted a notification of closure during the period beginning on the 
date such notification is submitted to CMS and ending on the date on 
which all residents are successfully relocated. Therefore, CMS will 
determine, as appropriate, whether to continue to make payments with 
respect to residents of an LTC facility that has submitted a 
notification of closure as required at Sec.  483.75(r). We believe this 
matter is purely operational and not amenable to the discretion implied 
by an opportunity for public comment. If residents have concerns 
regarding a facility closure and relocation process, we would encourage 
them to make their concerns known to the State LTC Ombudsman.

I. Notice to CMS (Sec.  489.52(a))

    We revised Sec.  489.52(a)(1) to provide an exception for SNFs, and 
by adding a new requirement specific to SNF notifications to CMS. 
Specifically, at Sec.  489.52(a)(2), we specify that a SNF provider 
that wishes to terminate its agreement must send CMS written notice of 
its intent at least 60 days prior to the date of closure, in accordance 
with Sec.  483.75(r)(1)(i).
    We did not receive any public comments regarding this provision. 
Therefore, we are finalizing the revisions of Sec.  489.52(a)(2) as set 
forth in the interim final rule.

J. Skilled Nursing Facility Closure (Sec.  489.53(d)(3))

    We added a new requirement at Sec.  489.53(d)(3), to state that 
when CMS terminates a facility's participation under Medicare or 
Medicaid, CMS will determine the date of the required notifications. We 
also revised Sec.  489.53(d)(1) to reflect this change.
    We did not receive any public comments regarding this provision. 
Therefore, we are finalizing Sec.  489.53(d)(1) and (d)(3) as set forth 
in the interim final rule.

K. Exceptions to Effective Date of Termination (Sec.  489.55)

    We added a new requirement at Sec.  489.55 that authorizes the 
Secretary to continue to make payments to the SNF or, for a NF, to the 
State, as the Secretary considers appropriate, during the period 
beginning at the time the notification is submitted and until the 
resident is successfully relocated. In this final rule, we are 
correcting a typographical error in the regulations text at Sec.  
489.55(a)(1). The provision will now read, ``Inpatient hospital 
services (including inpatient psychiatric hospital services) and post 
hospital extended care services * * * ''
    The comments we received on this provision and our responses are 
set forth below.
    Comment: A few commenters recommended CMS consider the role 
economic factors play in a decision to close, the potential impact of 
discontinued funding to resident care and services during the closure 
process, and to support ongoing policy for continued payment through 
the 60-day notice period or until the last resident is successfully 
relocated, whichever is earlier.
    Response: We agree with the need to provide continued funding until 
all of the residents are successfully relocated. As stated in a 
previous response, section 1128I(h)(3) of the Act authorizes the 
Secretary to continue to make payments with respect to residents of an 
LTC facility that has submitted the required notification of closure to 
CMS.

[[Page 16802]]

L. Scope and Applicability (Sec.  498.3)

    We added a new requirement at Sec.  498.3(a)(2)(iv) to clarify that 
CMS may also impose sanctions on NF administrators for noncompliance 
with Sec.  483.75(r). We also added a new requirement at Sec.  
498.3(a)(3)(ii) to indicate that the appeals process applies to NFs as 
well as SNFs. In addition, a new requirement was added at Sec.  
498.3(b)(18) to indicate that a sanction imposed on a SNF or NF 
administrator for noncompliance with the requirements set out at Sec.  
483.75(r) constitutes an initial determination of the agency.
    We did not receive any public comments regarding this provision. 
Therefore, we are finalizing the revisions at Sec.  498.3(a)(2)(iv) as 
set forth in the interim final rule. However, we are correcting a 
typographical error at Sec.  498.3(a)(3), to include, ``(iii)'' when 
referring to Part 488, subpart E (Sec.  488.330(e)) and subpart F 
(Sec.  488.446)--for SNFs and NFs and their administrators.

M. Appeal Rights (Sec.  498.5)

    We added a new requirement at Sec.  498.5(m), to establish appeal 
rights for administrator sanctions for noncompliance with the 
requirements set out at Sec.  483.75(r).
    We did not receive any public comments regarding this provision. 
However, we are making a technical correction at Sec.  498.5(m) to 
include, ``or NF'' when referring to the appeal rights of an individual 
who is the administrator. We had included the term ``NF'' in the 
February 18, 2011 interim final rule's preamble language on this 
provision, but inadvertently omitted it from the corresponding 
regulations text.

IV. Provisions of the Final Regulations

    We are adopting as final the requirements set forth in the interim 
final rule published in the Federal Register on February 18, 2011 (76 
FR 9503), with the following changes:
     We are revising Sec.  483.12(a)(8) and Sec.  483.75(r)(1) 
to clarify that the facility must submit written notification of an 
impending closure to ``the State Survey Agency'' instead of ``the 
Secretary''.
     We note that we inadvertently omitted language regarding 
the statutory requirement at 1128I(h)(1)(C) for State approval of the 
plan. We are correcting the language accordingly in section Sec.  
483.75(r)(3) of the regulations text in this final rule.
     We are correcting a typographical error in the provision 
regarding the period of continued payments at Sec.  488.450(c)(2), 
which will now read, `` * * * ending on the date on which the residents 
are successfully relocated.''
     We are correcting a typographical error in the provisions 
regarding Exceptions to the effective date of termination at Sec.  
489.55(a)(1), which will now read, ``Inpatient hospital services 
(including inpatient psychiatric hospital services) and post hospital 
extended care services * * * ''
     We are correcting a typographical error at Sec.  
498.3(a)(3), to include, ``(iii)'' when referring to Part 488, subpart 
E (Sec.  488.330(e)) and subpart F (Sec.  488.446)--for SNFs and NFs 
and their administrators.
     We are making a technical correction at Sec.  498.5(m) to 
include, ``or NF'' when referring to the appeal rights of an individual 
who is the administrator. We included NFs in the preamble language and 
inadvertently omitted it from the regulation text.
     We inadvertently omitted a citation from all authority 
citations in the regulation text. We are correcting that error by 
adding ``1320a-7j'' to all authority citations.

V. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 30-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act 
of 1995 requires that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We requested public comment on each of these issues for the 
following sections of this document that contain information collection 
requirements (ICRs):
    The revisions at Sec.  483.12(a)(8) require any individual who is 
the administrator of the facility to submit to the Secretary, the State 
LTC ombudsman, residents and their legal representatives, or other 
responsible parties, written notification of an impending closure at 
least 60 days prior to such closure; or not later than the date that 
the Secretary deems appropriate in the case of a facility where the 
Secretary terminates the facility's participation under this title.
    Current regulations at Sec.  483.12(a)(5) require notification of 
transfer or discharge to a resident and, if known, a family member or 
legal representative, in writing. Except in certain specified 
circumstances, notification must be made at least 30 days prior to 
transfer or discharge. Facility closure is not a circumstance that 
permits a facility to make notification in fewer than 30 days. Although 
the requirement extends the time period for notification from 30 days 
to 60 days (or a date determined by the Secretary in case of CMS 
termination of the facility), we do not believe the change in the time 
period for reporting imposes any additional burden. In addition, 
notification of transfer or discharge to residents and their 
representatives is already a usual and customary business practice. 
Therefore, in accordance with 5 CFR 1320.3(b)(2), we will not include 
this activity in the ICR burden analysis.
    Although there are no existing Federal regulatory requirements for 
LTC facilities to notify other individuals or entities of an impending 
closure, according to feedback to CMS from State surveyors for LTC 
facilities, nearly all States already require LTC facilities to notify 
the State within 30 to 90 days. Because we have found that 
notifications of impending closure are a standard business practice for 
most LTC facilities, we believe that this requirement would impose 
burden on only a small number of facilities.
    Each facility that does not already notify the State and the State 
LTC ombudsman must develop a process for notifying these entities. We 
estimate that the burden associated with complying with this 
requirement would be due to the resources required to develop a process 
for notifying the State and the State LTC ombudsman and the time it 
takes to notify those entities. We expect that the notification process 
would involve the administrator of the facility and administrative 
support person and an attorney to review the plan.
    The revisions at Sec.  483.75(r)(2) require that the administrator 
of the facility ensure that the facility does not admit any new 
residents on or after the date written notification is submitted. We do 
not anticipate any ICR burden associated with this requirement.
    Section 483.75(r)(3) requires the administrator of the facility to 
include in the notice the plan for the transfer and adequate relocation 
of the residents

[[Page 16803]]

of the facility by a date that is specified by the State prior to 
closure, that has been approved by the State, including assurances that 
the residents would be transferred to the most appropriate facility or 
other setting in terms of quality, services, and location, taking into 
consideration the needs, choice, and best interests of each resident.
    Section 483.75(s) requires the facility to have in place policies 
and procedures to ensure that the administrator's duties and 
responsibilities include the provision of the appropriate notices in 
the event of a facility closure.
    In our experience, based on feedback to CMS from State surveyors of 
LTC facilities, most facilities already have plans for transfer of 
residents, regardless of whether closure of the facility is expected. 
For example, most facilities have plans for transfer of residents to 
another facility in the event of an emergency. Also, based on our 
experience, nearly all facilities anticipating closure develop plans 
for the relocation of residents and other closure-related activities. 
Many States require these plans. For example, Vermont requires that the 
State licensing agency and the LTC ombudsman be notified by the 
administrator of the facility 90 days prior to the proposed date of 
closure. Additionally, the facility administrator is required to 
provide to the State licensing agency and LTC ombudsman a written 
transfer plan 60 days prior to closure. See http://www.sph.umn.edu/hpm/nhregsplus/NH%20Regs%20by%20Topic/NH%20Regs%20Topic%20Pdfs/Admission/admission_transfer_and_discharge_rights_ALL_STATES.pdf.
    Because we have found that transfer plans are a standard business 
practice for most LTC facilities, we believe that this requirement 
would impose burden on only a small number of facilities.
    Each facility that does not already have a plan in place must 
develop a plan for the transfer and adequate relocation of residents of 
the facility. We estimate that the burden associated with complying 
with this requirement would be due to the resources required to develop 
and review a new plan or, if necessary, modify an existing plan for the 
transfer of residents in the event of facility closure. We expect that 
development of a plan would involve the administrator of the facility, 
an administrative support person, and an attorney to review the plan.
    LTC facilities are currently required to have a plan under Sec.  
483.12 for discharge and transfer of residents. A facility must provide 
sufficient preparation and orientation to residents to ensure safe and 
orderly transfer or discharge from the facility. Therefore, we 
anticipate that, on average, it will take 3 hours to develop the plan, 
1 hour to ensure that the administrator's duties include policies and 
procedures relating to facility closures, 2 hours for an administrative 
support person to prepare the document(s), and 1 hour for an attorney 
to review the document(s), for a total estimated burden of 7 hours per 
facility. We also believe that the burden would remain approximately 
the same for the first year and beyond.
    Currently, there are 15,720 LTC facilities in the U.S. Based on an 
hourly rate of $58.17 for a nursing home administrator, we estimate 
that development of the plan and incorporating facility closure 
policies and procedures into the administrator's duties would cost 
$3,657,729.60 (15,720 facilities x 4 hours per facility) x $58.17 per 
hour). Based on an hourly rate of $20.11 for an administrative 
assistant, we estimate that preparing the plan documents would cost 
$632,258.40 ((15,720 facilities x 2 hours per facility) x $20.11 per 
hour). Finally, based on an hourly rate of $82.50 for an attorney, we 
estimate that reviewing the plan document would cost $1,296,900.00 
((15,720 facilities x 1 hour per facility) x $82.50 per hour). The 
salary estimates include 33 percent of the mean hourly rate for 
overhead and fringe benefits (Source: BLS.gov). Therefore, we 
anticipate that the total burden associated with this provision is 
$5,586,888.00 (15,720 facilities x 7 hours per facility at $355.40).
    If you comment on these information collection and recordkeeping 
requirements, please submit your comments to the Office of Information 
and Regulatory Affairs, Office of Management and Budget, Attention: CMS 
Desk Officer, CMS-3230-F Fax: (202) 395-6974; or
    Email: OIRA_submission@omb.eop.gov

VI. Regulatory Impact Analysis

A. Statement of Need

    Executive Order 13563 directs agencies to consider and discuss 
qualitatively values that are difficult to quantify, including equity, 
human dignity, fairness and distributive impacts. This final rule will 
implement section 1128I(h) of the Act (as amended by section 6113 of 
the Affordable Care Act), which mandates specific procedures in the 
event of a closure of a nursing home. LTC facility closure procedures 
have implications related to access to care, the quality of care, and 
the overall health of residents. These procedures help protect the 
resident, the resident's family, and visitors because they require the 
facility to provide an organized plan that allows the resident, family, 
and visitors to make the necessary adjustments within a reasonable time 
frame.

B. Overall Impact

    We have examined the impacts of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 
1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, 
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 
1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4, 
1999) and the Congressional Review Act (5 U.S.C. 804(2).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). A 
regulatory impact analysis (RIA) must be prepared for major rules with 
economically significant effects ($100 million or more in any 1 year). 
This rule does not qualify as a major rule as the estimated economic 
impact. We estimate that these requirements will cost $355.40 
(5,586,888.00/15,720) per facility the first year and each year 
thereafter. Due to the increase in the number of long-term care 
facilities, we recalculated the economic impact of the February 18, 
2011 IFC and have determined that it has slightly increased by $2,488 
in total. (The number of long-term care facilities has increased 
slightly since publication of the interim final rule.) As a result, the 
economic impact for the February 18, 2011 IFC is $5,586,888.
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses, if a rule has a significant impact on a 
substantial number of small entities. For purposes of the RFA, small 
entities include small businesses, nonprofit organizations, and small 
government jurisdictions. The great majority of hospitals and most 
other health care providers and suppliers are small entities, either by 
being nonprofit organizations or by meeting the SBA definition of a 
small business (having revenues of less than $7.0 million to $34.5 
million in any 1 year). For purposes of the RFA, most physician

[[Page 16804]]

practices, hospitals, and other providers are small entities, either by 
nonprofit status or by qualifying as small businesses under the Small 
Business Administration's size standards (revenues of less than $7.0 to 
$34.5 million in any 1 year). States and individuals are not included 
in the definition of a small entity. For details, see the Small 
Business Administration's Web site at http://www.sba.gov/about-sba-services/7591. A rule has a significant economic impact on the small 
entities it affects, if it significantly affects their total costs or 
revenues. Under statute, we are required to assess the compliance 
burden the regulation will impose on small entities. Generally, we 
analyze the burden in terms of the impact it will have on entities' 
costs if these are identifiable or revenues. As a matter of sound 
analytic methodology, to the extent that data are available, we attempt 
to stratify entities by major operating characteristics such as, size 
and geographic location. If the average annual impact on small entities 
is 3 to 5 percent or more, it is to be considered significant.
    We estimate that these requirements will cost $355.40 
($5,586,888.00/15,720 facilities) per facility initially and $355.40 
($5,586,888.00/15,720 facilities) thereafter. This clearly is far below 
1 percent of total facility costs or revenues; therefore, we do not 
anticipate it to have a significant impact. We do not have any data 
related to the number of LTC facilities that have facility closure 
plans in place; however, we are aware through our experience with LTC 
facilities and the survey process that most facilities have a plan for 
closure either because they are required to have a plan in place at the 
State level or because of their understanding that this is a standard 
business practice.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 604 of the RFA. For 
the purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a metropolitan 
statistical area and has fewer than 100 beds. This rule would only 
affect those institutions that meet the definition of a ``facility'' in 
section 1128I(a) of the Act; that is, SNFs and NFs. Therefore, the 
Secretary has determined that this final rule would not have any impact 
on the operations of small rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. In 2012, that 
threshold is approximately $139 million. This rule would not have a 
significant impact on the governments mentioned or on private sector 
costs. The estimated economic effect of this rule is $5,586,888.00 the 
first year and $5,586,888.00, thereafter. These estimates are derived 
from our analysis of burden associated with these requirements in 
section IV, ``Collection of Information Requirements.''
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications. This rule will not have any effect on State or local 
governments.

C. Anticipated Effects

    1. Effects on LTC Facilities
    The purpose of this final rule is to ensure that, among other 
things, in the case of a facility closure, any individual who is the 
administrator of the facility will provide written notification of the 
closure and the plan for the relocation of residents at least 60 days 
prior to the impending closure or, if the Secretary terminates the 
facility's participation in Medicare or Medicaid, not later than the 
date the Secretary determines appropriate. This rule will protect 
residents' health and safety and make the transition to closure as 
smooth as possible for residents, as well as family members and 
facility staff.
    2. Effects on Other Providers
    This rule is expected to allow for a smoother transition when a 
facility closes. It requires facilities and facility administrators to 
prepare in advance for closure so that, in the event of a closure, the 
facility is equipped to protect resident rights and continue to provide 
quality care to residents who must be relocated. This final rule will 
also improve coordination of care between the transferring LTC facility 
and the chosen destination setting. For example, if a resident is 
transferred from an LTC facility to a non-LTC facility such as an 
assisted living facility, we do not believe that non-LTC facilities 
would experience any increase in administrative burden as a result of 
these provisions. In fact, we anticipate that the receiving facility 
would benefit from increased coordination with the transferring LTC 
facility.
    3. Effects on the Medicare and Medicaid Programs
    This rule will require that the State and CMS be notified in the 
case of a facility closure and provides them with the ability to make 
determinations regarding the timing of termination of provider 
agreements and continuation of payments to LTC facilities. This rule 
will also support efforts directed toward broad-based improvements in 
the quality of health care furnished by Medicare and Medicaid 
providers.

D. Alternatives Considered

    We considered the effects of not addressing specific requirements 
for the notification of facility closures in LTC facilities, although 
these requirements are statutory and only allow limited discretion on 
the part of the Secretary. However, we strongly believe that to improve 
quality and ensure consistency in the provision of care in LTC 
facilities, it is important to ensure that residents rights are 
protected in LTC facilities and that they are relocated appropriately, 
taking into consideration the needs, choice, and best interest of each 
resident should a facility closure take place. We expect that these 
requirements will result in improvement in the quality of services 
provided to LTC residents when they need to be involuntarily relocated 
as a result of the closures.

E. Conclusion

    This final rule ensures that, among other things, in the case of a 
facility closure, any individual who is the administrator of the 
facility provide written notification of the closure and the plan for 
the relocation of residents at least 60 days prior to the impending 
closure or, if the Secretary terminates the facility's participation in 
Medicare or Medicaid, not later than the date the Secretary determines 
appropriate.
    It is consistent with the requirements set forth in section 6113 of 
the Affordable Care Act and the Administration's efforts toward broad-
based improvements in the quality of health care furnished by Medicare 
and Medicaid providers.
    This final rule clarifies the responsibility of the administrator 
of a facility (which is to ensure that the designated parties are 
notified of an impending closure within a specified timeframe), and 
identifies penalties for non-compliance. It also clarifies the 
responsibility of the administrator of the facility to ensure that no 
new residents are admitted after written notice is submitted and that 
the notice of closure must include a plan for transfer and adequate 
relocation to another facility. These facilities must take into

[[Page 16805]]

consideration the needs, choice, and best interests of each resident.
    In accordance with the provisions of Executive Order 12866, this 
regulation was not reviewed by the Office of Management and Budget.

List of Subjects

42 CFR Part 483

    Grant programs-health, Health facilities, Health professions, 
Health records, Medicaid, Medicare, Nursing homes, Nutrition, Reporting 
and recordkeeping requirements, Safety.

42 CFR Part 488

    Administrative practice and procedure, Health facilities, Medicare, 
Reporting and recordkeeping requirements.

42 CFR Part 489

    Health facilities, Medicare, Reporting and recordkeeping 
requirements.

42 CFR Part 498

    Administrative practice and procedure, Health facilities, Health 
professions, Medicare, Reporting and recordkeeping requirements.

    Accordingly, the interim rule amending 42 CFR Parts 483, 488, 489, 
and 498, which was published at 76 FR 9503 on February 18, 2011, is 
adopted as final with the following changes:

PART 483--REQUIREMENTS FOR STATES AND LONG TERM CARE FACILITIES

0
1. The authority citation for part 483 is revised to read as follows:

    Authority:  Secs. 1102, 1128I and 1871 of the Social Security 
Act (42 U.S.C. 1302, 1320a-7j, and 1395hh).

Subpart B--Requirements for Long Term Care Facilities

0
2. Section 483.12 is amended by revising paragraph (a)(8) to read as 
follows:

Sec.  483.12  Admission, transfer and discharge rights.

    (a) * * *
    (8) Notice in advance of facility closure. In the case of facility 
closure, the individual who is the administrator of the facility must 
provide written notification prior to the impending closure to the 
State Survey Agency, the State LTC ombudsman, residents of the 
facility, and the legal representatives of the residents or other 
responsible parties, as well as the plan for the transfer and adequate 
relocation of the residents, as required at Sec.  483.75(r).
* * * * *
0
3. Section 483.75 is amended by revising paragraphs (r)(1) introductory 
text and (r)(3) to read as follows:

Sec.  483.75  Administration.

* * * * *
    (r) * * *
    (1) Submit to the State Survey Agency, the State LTC ombudsman, 
residents of the facility, and the legal representatives of such 
residents or other responsible parties, written notification of an 
impending closure:
* * * * *
    (3) Include in the notice the plan, that has been approved by the 
State, for the transfer and adequate relocation of the residents of the 
facility by a date that would be specified by the State prior to 
closure, including assurances that the residents would be transferred 
to the most appropriate facility or other setting in terms of quality, 
services, and location, taking into consideration the needs, choice, 
and best interests of each resident.
* * * * *

PART 488--SURVEY, CERTIFICATION, AND ENFORCEMENT PROCEDURES

0
4. The authority citation for part 488 is revised to read as follows:

    Authority: Secs. 1102, 1128I and 1871 of the Social Security 
Act, unless otherwise noted (42 U.S.C. 1302, 1320a-7j, and 1395hh); 
Pub. L. 110-149, 121 Stat. 1819.

Subpart F--Enforcement of Compliance for Long-Term Care Facilities 
With Deficiencies

0
5. Section 488.450 is amended by revising paragraph (c)(2) to read as 
follows:

Sec.  488.450  Continuation of payments to a facility with 
deficiencies.

* * * * *
    (c) * * *
    (2) Facility closure. In the case of a facility closure, the 
Secretary may, as the Secretary determines appropriate, continue to 
make payments with respect to residents of a long-term care facility 
that has submitted a notification of closure during the period 
beginning on the date such notification is submitted to CMS and ending 
on the date on which the residents are successfully relocated.
* * * * *

PART 489--PROVIDER AGREEMENTS AND SUPPLIER APPROVAL

0
6. The authority citation for part 489 is revised to read as follows:

    Authority:  Secs. 1102, 1128I and 1819, 1820(e), 1861, 1864(m), 
1866, 1869, and 1871 of the Social Security Act (42 U.S.C. 1302, 
1320a-7j, 1351i73,1395x, 1395aa(m), 1395cc, 1395ff, and 1395hh).

Subpart E--Termination of Agreement and Reinstatement After 
Termination

0
7. Section Sec.  489.55 is amended by revising paragraph (a)(1) to read 
as follows:

Sec.  489.55  Exceptions to effective date of termination.

    (a) * * *
    (1) Inpatient hospital services (including inpatient psychiatric 
hospital services) and post hospital extended care services (except as 
specified in paragraph (b) of this section with respect to LTC 
facilities) furnished to a beneficiary who was admitted before the 
effective date of termination; and
* * * * *

PART 498--APPEAL PROCEDURES FOR DETERMINATIONS THAT AFFECT 
PARTICIPATION IN THE MEDICARE PROGRAM AND FOR DETERMINATIONS THAT 
AFFECT THE PARTICIPATION OF ICFs/MR AND CERTAIN NFs IN THE MEDICAID 
PROGRAM

0
8. The authority citation for part 498 is revised to read as follows:

    Authority:  Secs. 1102, 1128I and 1871 of the Social Security 
Act (42 U.S.C. 1302, 1320a-7j, and 1395hh).

Subpart A--General Provisions

0
9. Section 498.3 is amended by revising paragraph (a)(3) to read as 
follows:

Sec.  498.3  Scope and applicability.

    (a) * * *
    (3) The following parts of this chapter specify the applicability 
of the provisions of this part 498 to sanctions or remedies imposed on 
the indicated entities or individuals:
    (i) Part 431, subpart D--for nursing facilities (NFs).
    (ii) Part 488, subpart E (Sec.  488.330(e))--for SNFs and NFs.
    (iii) Part 488, subpart E (Sec.  488.330(e)) and subpart F (Sec.  
488.446)--for SNFs and NFs and their administrators.
* * * * *

0
10. Section 498.5 is amended by revising paragraph (m) to read as 
follows:

Sec.  498.5  Appeal rights.

* * * * *
    (m) Appeal rights of an individual who is the administrator of a 
SNF or NF. An individual who is the administrator of a SNF or NF who is 
dissatisfied with

[[Page 16806]]

the decision of CMS to impose sanctions authorized under Sec.  488.446 
of this chapter is entitled to a hearing before an ALJ, to request 
Board review of the hearing decision, and to seek judicial review of 
the Board's decision.

(Catalog of Federal Domestic Assistance Program No. 93.778, Medical 
Assistance Program)

    (Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)

    Dated: May 23, 2012.
Marilyn Tavenner,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Approved: July 20, 2012.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.

    Editorial Note: This document was received at the Office of the 
Federal Register on March 14, 2013.
[FR Doc. 2013-06276 Filed 3-15-13; 11:15 am]
BILLING CODE 4120-01-P
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