Nursing home operators say the civil monetary penalty (CMP) expansion is proving to be one of the most problematic features of the 2025 Skilled Nursing Facility Prospective Payment System (SNF PPS) final rule.

Initially, there was excitement for the Medicare payment increase, but this has turned to dread for operators who are already dealing with slim margins and the prospect of closures due to added labor expenses linked to the federal minimum staffing mandate.

Experts in the sector believe that these new rules from the Centers for Medicare & Medicaid (CMS) are not necessary or advisable, and will increase uncertainty among providers.

According to Brian Ellsworth, vice president for public policy and payment transformation with Health Dimensions Group (HDG), the expanded CMPs could even prompt more litigation as the Chevron doctrine gives more power to the courts to interpret ambiguous federal rules.

“I don’t think that’s a great outcome,” Ellsworth said of potential increased litigation. “You’re creating a whole lot of risk for facilities rather than investing in systems of care and systemic quality improvement.”

Instead of providing resources, the final rule creates a “whole bunch of regulatory risk,” he said, which in some cases can now be litigated. All of this has the capacity of starving facilities out of resources they desperately need.

“CMS already has plenty of tools. Scope and severity designations, ban on admissions, special focus facilities, and directed plans of correction, which was used effectively during Covid,” he said. “It is ironic that CMS is asking for more flexibility to apply Civil Monetary Penalties in the name of making things more uniform. It is rarely the case that more flexibility leads to increased uniformity.”

Amy Greer, director of quality innovations for Zimmet Healthcare Services Group expressed frustration but not surprise as CMS decided to move forward with CMP expansion. “It really is further insult to injury to those nursing facilities that are already struggling and trying to shake off old Covid scars,” Greer said in an email to Skilled Nursing News.

CMS’ rationale for the expansion was to help create uniformity across the nation, Greer said. In their example, CMS laid out the same noncompliance in two facilities in different states. CMP amounts would be different based on the number of days between identification of noncompliance by the surveyor and the date of correction by the facility, they said, but that’s a bit ironic and hypocritical, Greer said.

“A vast majority of our nation’s nursing facilities have been waiting and waiting for their next health inspection to happen. There are facilities that actually want to have their annual inspection, to wash the old cycles away,” Greer wrote. “The irony is now [CMS] will come in and find an issue from over 18 months ago, and now want to find a way to fine [the facility retroactively per diem from when that issue was found.”

This change reinforces and illuminates that CMS and state surveyors are behind on their surveys – and yet, nursing home operators are voiceless to do anything about it, she said.

“The general feeling I am left with is ‘The beatings will continue until morale improves,’” said Greer.

The rule itself revises regulation to expand the type of CMPs that can be imposed, allowing for more per instance and per day, but still subject to statutory daily limits. CMS can also exercise discretion with regard to a nursing home’s financial condition in determining the appropriate CMP, the agency said in a memo.

Starving nursing homes of resources

CMP expansion could also starve nursing homes of necessary resources, Ellsworth said.

It remains to be seen how and what percentage of CMPs will be used for quality improvement initiatives, staff training and retention of facilities. CMS has said in the past that these funds would be used for emergency preparedness and other projects to enhance the residents’ quality of life, but there weren’t details on this in the final rule, Greer said.

“What happens when CMS comes in three months from now and decides it didn’t like how you did your facility assessment – they could fine you back to Aug. 8,” added Ellsworth.

Ellsworth believes CMS can learn a lot from state Medicaid programs at the moment, which are providing increased investments in quality incentive programs. Investing in systems of care is more appropriate than increasing fines – it provides positive incentives and the resources to go with them, he said.

What’s more, if providers are forced to litigate the issue of expanded CMPs, the Chevron decision could mean an influx of litigation to fight back on neverending fines, at least for operators with the resources to do so.

“It would be a shame that they had to do that instead of investing in systems of care,” said Ellsworth.

Fines and threat of closure, litigation

Nursing home leaders are concerned that the CMP expansion will pile on fines even more than they’re doing now, despite the threat of closure among nursing homes. And, with the Chevron doctrine giving employers incentive to challenge federal statute in court, it’s possible the CMP expansion will be challenged in the same way that nursing home associations challenged the staffing mandate.

“The agency is no longer entitled to deference in content and policy of this magnitude, where you’re potentially putting regulated entities out of business without some pretty clear directive to do so,” said Ellsworth.

Ellsworth said a client facility was cited for an isolated infection control incident, but then was resurveyed three more times, resulting in a seven-figure fine and facing the prospect of closure, with existing policy. 

“​I think a big point there is that CMS already has tools like scope and severity. They need to have a more thoughtful process on how and when to impose those,” he said. “[CMP expansion] creates a whole degree more that’s hard to comprehend right now until we actually see them implement these penalties in a specific instance.”

There’s a big focus on this particular penalty, CMPs, when the agency has other penalties including bans on admissions, directed plans of action, and special focus facilities (SFFs).

“That’s really targeted more towards chronic repeat non-compliant facilities,” Ellsworth said of SFFs. “Why don’t they put their efforts there. And if that program needs to be enhanced, then that’s maybe something that they should look at before they just expand the scope of civil monetary penalties.”

Other alternatives can be found in quality incentive programs among state Medicaid programs, he said. New measures are added with funding to match, giving operators an incentive and resources to achieve the incentive.

“That is a much more effective way to drive quality than just penalizing folks in an uncertain framework,” said Ellsworth of state Medicaid changes.