Termination of Skilled Nursing Facility Medicaid Provider Agreements: Procedural Due Process Requirements

Abstract

AbstractWhen a state Medicaid agency terminates its provider agreement with a skilled nursing facility, federal regulations give the state the option of providing a pretermination evidentiary hearing; they do not, however, require that a state provide such a hearing. If a state chooses not to grant a pretermination hearing, as a number of states have done, federal regulations require: (1) an informal written reconsideration made by the state and submitted to the skilled nursing facility before the effective date of the termination, and (2) a posttermination evidentiary hearing.This Article argues that a skilled nursing facility has a right under the due process clauses of the fifth and fourteenth amendments of the U. S. Constitution to an evidentiary hearing before termination of its Medicaid provider agreement. The author claims that a skilled nursing facility's interest in continued receipt of Medicaid reimbursement under its provider agreement is a property interest entitled to constitutional due process protections, and not merely an expectation of economic benefit that does not implicate constitutional due process considerations.The Article concludes that, except in emergency situations, state Medicaid agencies are constitutionally required to grant a provider a pretermination, rather than a posttermination, evidentiary hearing. This procedure would protect the provider and its patients from the severe effects of an erroneous termination, while furthering the governmental interest in ensuring the health and safety of skilled nursing facility patients. The format for such a hearing should allow for the participation, with the assistance of counsel, of both the skilled nursing facility and its patients.