Alternative Sanctions Rule Finalized for Home Healthcare Agencies

The Centers for Medicare & Medicaid Services (CMS) finalized home health sanction regulations in the November 8, 2012 Federal Register notice. CMS responded to many of the concerns about implementation of sanctions raised by The National Association for Home Care & Hospice (NAHC) and other industry representatives in the proposed rule comment period. The effective dates for the sanctions will begin July 1, 2013 for non-monetary sanctions, with monetary sanctions effective July 1, 2014. According to CMS, the intent of the sanctions is to establish alternative penalties to termination that ensure prompt compliance.

Sanctions will be imposed if an HHA is not in “substantial compliance” with the conditions of participation (CoP). CMS assured commenters that decisions regarding whether to impose a sanction and what type of sanction to be imposed will be made by the CMS Region Office (RO), not the State survey agency.

CMS clarified questions raised about application of sanctions for standard level deficiencies alone by responding that “it would not be consistent for CMS to impose alternative sanctions based upon standard level deficiencies alone when the HHA is considered to be in compliance with the CoP.” To determine which sanction or sanctions will apply, CMS will consider:

  1. Whether the deficiencies poses immediate jeopardy;
  2. The nature, incidence, manner, degree, and duration of deficiencies or non-compliance;
  3. The presence of repeat deficiencies and compliance history;
  4. Whether the deficiencies are related to failure to provide quality care; and
  5. Whether the HHA is part of a larger organization with performance problems.

In cases where deficiencies pose immediate jeopardy to patient safety, CMS will terminate an agency’s provider agreement no later than 23 days from the last day of the survey, unless immediate jeopardy is removed. CMS may also impose sanctions in cases of immediate jeopardy. In non-jeopardy cases, agencies that are noncompliant with conditions of participation and repeat noncompliance with condition and standard-level deficiencies may also be subject to termination and imposition of sanctions.

CMS has finalized the following 5 sanctions:

  • Temporary management of the HHA
  • Suspension of payment
  • Civil money penalties
  • Directed plan of correction
  • Directed in-service training


  • Directed Plan of Correction: In instances where an agency failed to submit an acceptable plan of correction, CMS will impose a directed plan of correction developed by CMS or a temporary manager. If the agency fails to achieve compliance within the timeframe specified in the plan, CMS would impose one or more additional sanctions until compliance is achieved or the agency is terminated.
  • Directed In-service Training: Agency staff will be required to attend in-service training programs if CMS determines that education would lead to correction of deficiencies. Providers of educational programs must be approved by CMS or the State, with payment by the agency. Other sanctions could be imposed if the agency has not achieved compliance after completing the education.
  • Temporary Management: Temporary management sanction will be imposed if CMS determines that management limitations impair an agency’s ability to correct deficiencies. The agency would be required to pay for the salary and additional costs incurred, which would not be allowable on a cost report. Temporary management would be in place until substantial compliance is achieved (not to exceed 6 month) or the agency is terminated.
  • Suspension of Payment: CMS will also suspend payment for all new admissions and new payment episodes if an agency has a condition-level deficiency, if it is found to be out of “substantial compliance.” Once “substantial compliance” is achieved, payments will be resumed “prospectively.” CMS does not intend to pay for any new admissions or new episodes of care during the period of noncompliance.
  • Civil Money Penalties: The determination of the size of the penalty will be based on the size of the agency, access to care from other agencies in the area, information about operation and resources of the agency, and evidence of a quality improvement system. Penalties will be adjusted up or down based on resurvey findings.

The final rule confirmed specific penalty ceilings (not to exceed $10,000/day) and ranges dependent on the nature of the deficiency. Upper range penalties included: $10,000/day will be imposed for immediate jeopardy that results in actual harm, $9,000 per day for immediate jeopardy without actual harm, $8,500 per day for an isolated incident of noncompliance in violation of an established HHA policy.

Middle range penalties of $1,500-$8,500/day will be imposed for repeat and/or condition-level deficiencies without immediate jeopardy but related to poor quality patient care outcomes. Lower range penalties of $500-$4,000 will be imposed for a repeat and/or condition-level deficiency that does not constitute immediate jeopardy and related to predominately structure or process oriented conditions. Penalties could also be imposed per instance of noncompliance for single events that were corrected during survey. The range for these penalties is $1,000 to $10,000 per instance.

Plan for Implementation

At this time CMS staff is working on development of policies, surveyor guidance, and educational materials for home health agency surveys and the application of sanctions. In the final rule notice CMS stated that they will “dialogue with all stakeholders as we prepare for implementation.” NAHC confirmed that CMS will include HHA industry representation in the process. CMS plans to use their experience with the nursing home sanction program in the development of HHA sanctions. Finalization of policies and surveyor guidance is not expected until Spring 2013. Educational programming conducted by CMS will take place at that time for both surveyors and home health agency personnel.


From the NAHC Report Article