Order Code RS20118
Updated March 29, 1999
CRS Report for Congress
Received through the CRS Web
Nursing Home Evictions of Medicaid Patients
Following Voluntary Withdrawal From Medicaid
Program: Current Issues and Congressional
American Law Division
Nursing facilities that choose to participate in the Medicaid program must comply
with specific requirements relating to patients’ rights, including transfer and discharge
procedures. However, once a facility has voluntarily withdrawn from the Medicaid
program, transfer and discharge protections no longer apply to residents in the facility.
In 1998, the Vencor Corporation evicted large numbers of Medicaid residents from its
nursing homes pursuant to its decision to withdraw from the Medicaid program.
Congressional response following the Vencor case included consideration of H.R. 540
and S. 494, 106th Congress companion bills prohibiting transfers or discharges of
residents of nursing facilities as a result of a voluntary withdrawal from participation in
the Medicaid program. The House passed H.R. 540 on March 10th. On March 15th the
Senate voted unanimously to pass S. 494. President Clinton signed the measure into law
on March 25, 1999.
In the spring of 1998, the Vencor Corporation began the process of withdrawing its
nursing facilities from participation in the Medicaid program. At the same time Vencor
began discharging Medicaid patients from certain nursing homes. In one case, fifty-four
Medicaid residents in its Rehabilitation and Healthcare Center of Tampa, Florida were
given a discharge notice on March 30, 1998. The residents were not told that Vencor was
withdrawing from Medicaid, but rather that the discharges were necessitated by facility
renovations. Adverse publicity and action by the Florida Agency for Health Care
Administration caused Vencor to reverse its policy regarding Medicaid residents in Florida
and in other states. However, the incident highlighted an issue which has prompted
congressional attention, i.e., whether Medicaid residents should have the right to remain
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in a nursing home once the facility voluntarily ceases to participate in the federal program.
Transfer and Discharge Provisions Under The Medicaid Statute
Under current law, nursing facilities that choose to participate in the Medicaid
program must comply with specific requirements relating to patients’ rights as set forth in
section 1919 of the Social Security Act, 42 U.S.C. § 1396r(C)(2). Generally, a nursing
facility may not transfer or discharge any resident1 of a participating facility unless the
transfer or discharge is necessary for the resident’s welfare, or because the resident’s
health has improved enough to leave the facility, or unless the safety or health of others
in the facility is endangered, or for non-payment for services, or if the facility ceases to
operate. A resident may not be discharged for non-payment for services on the basis that
the Medicaid payment rate is less than the private pay rate when a patient converts from
private pay status to a Medicaid resident.2 Various documentation and notice
requirements apply to transfers or discharges that are permitted under the Medicaid
statute.3 Civil remedies are provided under the Medicaid statute for use by the Secretary
of the Department of Health and Human Services (HHS) and the states when a nursing
facility violates the transfer and discharge requirements.4 These remedies include federal
civil monetary penalties of up to $10,000 per day under certain circumstances.5
Since Medicaid nursing home participation is voluntary in most cases, nursing homes
may choose to end their participation in the program. Once a facility has left the program,
the transfer and discharge protections of the Medicaid statute no longer apply to the
facility. Thus, HHS has no authority to prevent evictions of Medicaid residents or other
residents after a facility has left the program.
H.R. 540/S. 494 and Congressional Action
H.R. 540, the “Nursing Home Resident Protection Amendments of 1999," was
introduced by Representative Jim Davis of Florida, on February 3, 1999. A companion
bill, S. 494, was introduced by Senator Bob Graham in the Senate on March 2, 1999.
These bills would prohibit transfers or discharges of residents of nursing facilities as a
result of a voluntary withdrawal from participation in the Medicaid program, if the nursing
facility continues to provide nursing care services. Specifically, a facility would be
prohibited from transferring or discharging any residents of the facility, whether or not
Medicaid recipients, solely because of its withdrawal from Medicaid participation. This
means that Medicaid residents would be allowed to continue to stay in the facility, and that
The Medicaid patients’ protections apply to all residents of a participating facility. A facility
must “establish and maintain identical policies and practices regarding transfer, discharge, and
covered services...regardless of source of payment.” 42 U.S.C. § 1396r(c)(4).
42 C.F.R. § 483.12(a)(2)(v) states that “(f)or a resident who becomes eligible for Medicaid after
admission to a facility, the facility may charge a resident only allowable charges under Medicaid.”
See 42 C.F.R. § 483.12.
See Sections 1919(h) of the Social Security Act, 42 U.S.C. § 1396r(h), and implementing
regulations at 42 C.F.R. §§ 488.400 et seq.
42 C.F.R. § 488.438.
the nursing home, even though it has withdrawn from the Medicaid program, would have
to continue to accept the state’s Medicaid payment rate as payment in full for such
residents. With respect to “private pay” residents in the facility at the time of withdrawal
from the Medicaid program, the facility would be required to permit such private pay
residents to convert to Medicaid and continue to reside in the facility for as long as it is
appropriate for them to do so.6 In addition, all Medicaid participation agreement
requirements would continue to apply to all individuals who were residents of the facility
on the day before the day the facility withdrew from the Medicaid program, until such
individuals no longer need care
Under H.R. 540 and S. 494 a nursing facility would be required to advise individuals
who enter the facility after the facility has voluntarily withdrawn from the Medicaid
program that the facility is not participating in Medicaid, and that the facility may
discharge the resident from the facility if the resident becomes eligible for Medicaid. This
notice must be given to a new resident orally and in writing, and the facility must obtain
from the individual a written acknowledgment of the receipt of such information at the
time he or she becomes a resident.
H.R. 540 was the subject of a hearing on February 11, 1999 before the Health and
Environment Subcommittee of the House Commerce Committee. Support for the bill was
expressed by the Health Care Financing Administration of HHS and various senior citizen
organizations, such as the American Association of Retired Persons, the National Senior
Citizens Law Center, and the American Health Care Association. These groups argue that
the additional transfer and discharge protections of H.R. 540/S. 494 are necessary to
prevent the “eviction” of residents from facilities that in essence have become their homes.
Furthermore, many people who initially come to a nursing home as “private pay” patients
do so with the expectation that they will be able to remain in the facility once they have
depleted their assets and become eligible for Medicaid payments. On the other hand,
others have expressed concerns about the potential financial burden that a facility might
incur if it has to carry residents at the Medicaid payment rate indefinitely after the facility
has chosen to withdraw from the Medicaid program.
H.R. 540 was reported out of the Health and Environment Subcommittee on March
2, and on March 4th the bill was reported out of the House Committee on Commerce. On
March 10th, the House passed H.R. 540. S. 494 was reported favorably by the Senate
Finance Committee on March 4th. On March 15th the Senate voted unanimously to pass
S. 494. President Clinton signed the measure into law on March 25th. The provisions of
this law will now apply to voluntary withdrawals from participation in the Medicaid
program on or after March 25, 1999.
The provisions of these bills would not affect current regulations allowing a nursing facility to
operate “distinct parts” of their facilities as Medicare/Medicaid or Medicaid certified beds. 42
C.F.R. § 483.5. Thus, it is possible that a private pay resident who converts to Medicaid payment
status may not be able to remain in the facility if a Medicaid-certified bed is not available.
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