As part of its revised surveyor guidance, the Centers for Medicare & Medicaid Services (CMS) has issued updated rules regarding nursing home admission agreements, specifically targeting language that holds third parties personally responsible for resident payments. These revisions, which were detailed in a November 18, 2024, memo titled “Revised Long-Term Care (LTC) Surveyor Guidance,” enforce the provisions under 42 CFR §483.15(a)(3). A March 10, 2025, memo delayed the implementation date to April 28, 2025, allowing nursing homes additional time to prepare for compliance.
Under the updated guidance, CMS clarifies that nursing homes cannot request or require a third party to accept personal responsibility for paying the facility bill out of their own funds. However, if a representative has legal access to a resident’s funds, the facility can ask them to sign an agreement to use those funds for payment, without incurring personal liability.
A key update in the guidance further specifies that if an individual does not have legal access to the resident’s funds, the facility may not request or require that individual to pay the facility. Additionally, CMS emphasizes that any language requesting a third party to personally guarantee payment is noncompliant, even if the term “guarantee” is not specifically used. This applies to any language that holds a third party personally responsible for paying the facility. Examples of noncompliant language include:
Holding both the resident and a representative or third party jointly responsible for any sums due to the facility (while holding the resident solely responsible is allowable).
Holding the representative personally liable for failing to apply for Medicaid in a timely and complete manner, or allowing someone other than the signatory to the agreement to spend the resident’s resources intended for care.
Implied language suggesting that the resident could be discharged if the representative does not voluntarily agree to personally pay the facility to prevent discharge.
Holding a representative personally liable for unpaid amounts due to inaccurate financial information or failure to notify the facility of changes in the resident’s financial situation.
As part of the new guidance, CMS also references F-Tag 620, which specifically addresses Admission Agreements and Liability for Responsible Parties. This F-Tag reinforces the rule that a third party cannot be held personally liable for payment unless they have legal access to the resident’s funds, ensuring that nursing homes cannot require such personal guarantees in their admission agreements.
CMS emphasizes that admission agreements containing such language, whether in the main document or other signed agreements at admission or later, will be considered noncompliant. These rules apply to both initial admission agreements and those related to continued stays. Surveyors will be instructed to carefully review agreements for these noncompliant clauses.
Nursing homes should take action now to ensure their contracts comply with the revised rules and to avoid complications during surveys.
Access the guidance here.
Compliance Perspective
Issue
CMS has issued updated surveyor guidance concerning third-party guarantees of payment in nursing home admission agreements. Effective April 28, 2025, CMS’s revised guidance clarifies that nursing homes cannot require a third party to personally guarantee payment for a resident’s care. This update enforces 42 CFR §483.15(a)(3), which prohibits such guarantees as a condition for admission or continued stay. Nursing homes must ensure their admission agreements comply with these changes to avoid potential F-Tag citations and penalties.
Discussion Points
- Facilities should review and update their policies and procedures to align with CMS’s revised guidance. This includes ensuring that admission agreements do not include any language that holds third parties personally responsible for paying for care. Policies should also address how to assess whether a resident’s representative has legal access to the resident’s income or assets before requesting their signature on any contract.
- Provide training to relevant staff on the updated CMS requirements, focusing on the restrictions related to third-party guarantees of payment. Staff should be educated on how to properly assess and document a representative’s legal access to funds, as well as how to manage and revise admission agreements to avoid noncompliant language.
- Conduct regular audits to ensure that admission agreements are in compliance with the new CMS requirements. Audits should focus on identifying and correcting any language that might hold third parties personally liable for payments. Additionally, audits should verify that revised agreements and proper documentation are in place and that staff are following the updated policies and procedures.
*This news alert has been prepared by Med-Net Concepts, Inc. for informational purposes only and is not intended to provide legal advice.*
