Abrupt termination notices related to Medicaid and Medicare certification for nursing homes on the Special Focus Facilities (SFF) list have picked up dramatically as of late February, often occurring  without warning or giving facilities the chance to demonstrate improvement.

As a result of these abrupt terminations, nursing homes on the list have closed, including 143-bed Liberty Health and Wellness in Missouri and another property in Topeka, Kansas, while others seek to come to some sort of agreement with the agency behind closed doors. Attorneys familiar with the SFF process say turnover and reduction in the Centers for Medicare and Medicaid Services (CMS) staff may have something to do with the sudden termination notices.

Washington-based operator Vertical Health Services, which took on the distressed Liberty property a year-and-a-half ago and was in the process of turning it around, resorted to litigation to keep their Medicare and Medicaid reimbursement flowing, and the doors open.

The property was seeing an 88% improvement in survey points compared to the prior two survey cycles, and had one high-level scope and severity tag during Vertical’s tenure, which was resolved through independent dispute resolution (IDR). Vertical currently operates or manages 15 facilities across four states.

It wasn’t enough, however, with an extension on a temporary restraining order (TRO) being denied in March. A judge for the Western District of Missouri cited jurisdictional issues, and failure to state a claim upon which relief can be granted.

Bill Miller, CEO for Vertical, told Skilled Nursing News that his company filed a motion for reconsideration. And, as of Thursday, court documents show a request for a 14-day extension to file suggestions in opposition to the decision, and focus on negotiation efforts with CMS.

Still, the closure procedure seemed to outpace what could be done in court, or even what could be done to avoid the termination notice altogether, Miller said.

“There was no progressive discipline. There was no chance to correct,” said Miller. “We never had a chance to do an independent dispute resolution (IDR). We never had a chance to even clear the tag … we abated it right away.”

CMS posts monthly updates to the SFF list, and that any facility with deficiencies cited at Immediate Jeopardy on any two surveys while on the program, will be considered for “discretionary termination.”

Fallout from termination notices, and one success

The Department of Health and Human Services (HHS) immediately made Liberty submit a closure plan despite efforts to correct, and only gave them 30 days of funding once the termination notice was sent. Knowing the likelihood of being victorious against CMS is very low, Miller said he owed it to the residents to present them with their choices.

“[Residents are] notified by the state, the Ombudsman’s program comes in and they start helping people make discharge plans,” said Miller. “There are couples that were separated and had to be moved into different nursing homes in different cities. Some of the residents had to go two to three hours away.”

The last day residents were allowed in the building was March 20, Miller said.

The Kansas operator, meanwhile, weighed the pros and cons, ultimately deciding to close rather than risk the costly avenue of litigation.

In another case, law firm Hooper Lundy & Bookman was able to reverse a notice of termination for a client on the SFF list, in what attorneys called an “extraordinary result.” The California client got their termination notice on March 4 and had an expedited termination of 15 days.

“It was all hands on deck there for two weeks as we tried to struggle through a very, very difficult process,” Scott Kiepen, partner, litigation department co-chair for Hooper Lundy, told SNN. It was a similar case of new ownership but with a different result compared to Liberty.

Hooper Lundy’s client had only been operating the building for about nine months, while the facility itself was on the SFF list for five years.

What’s behind the rash of termination notices?

Kiepen and Mark Johnson, managing partner at Hooper Lundy, said turnover and reductions in the workforce within CMS’s regional offices has led to a loss of institutional knowledge, and that this is a possible answer for the rash termination notices. The remaining CMS representatives are less familiar with providers’ particular regulatory histories as SFFs, and their unique contributions to the health care delivery systems they serve, Johnson and Kiepen said.

“There’s been a tremendous amount of turnover in the [CMS] leadership positions since 2020, after what was probably about two decades of consistent policy of enforcement,” Kiepen said. “We were tasked with quickly educating the new leadership of region nine for CMS about these nuances, about the importance of that facility to the health care delivery system, and the facility’s unique regulatory history.”

There was an assumption that being on the SFF list for 31 months, and certain immediate jeopardy deficiencies, were wrongly attributed to the current ownership, Kiepen noted. Conversations between Hooper Lundy and CMS were able to happen before the situation escalated to litigation.

Kiepen and Johnson see this rising trend in abrupt termination of certifications continuing, at least until the new administration understands a bit better the unique circumstances for facilities on the SFF list.

“[The former Biden administration] called out IJs in [2022] modifications. They said facilities that receive consecutive IJs will face termination. For facilities failing the full surveys consecutively, or have intervening IJs, as opposed to just a one off G severity score, I could see the increased likelihood of those folks [facing termination],” said Johnson. “Particularly when you start seeing facilities at the 48-month mark, up to even 60 months on the program, those are going to be red flags, and there’s going to be significant scrutiny on those facilities.”

Johnson referenced the Biden administration’s imposition of harsher penalties for those on the SFF list as a means to push operators to work harder to get out of the program. The policy made completion requirements more challenging, and enforcement actions increased if a facility failed to show improvement.

Facilities on SFF facing termination notices usually don’t fight back because the resources involved are massive. The time spent and expenses incurred, not to mention the fear of retribution from CMS, all make challenging the termination notice very arduous, attorneys said.

CMS is really coming down hard on these facilities like never before, attorneys representing operators on the list have said. There’s ‘no rhyme or reason’ to the termination notices, with little regard to how long facilities have been on the list, and there’s no justification for such extreme measures to be taken now.

“Any notice of termination for a SFF facility must come with some notice and due process, and providers will need to be zealous advocates to work with CMS to assure that their unique stories are known,” Johnson said.