Civil Monetary Penalties

A relatively new funding strategy is the use of the fines, or civil monetary penalties, imposed on nursing homes that do not comply with the federal quality of care standards set by Medicare and Medicaid to fund quality improvements, including training for direct care staff. The Nursing Home Reform Act, which permits the imposition of sanctions, was passed in 1986, and the use of civil monetary penalties (CMPs) as a sanction began in 1995.

Federal CMP funds can be used for four specific purposes: maintaining the operation of a facility while deficiencies are corrected, receivership and the relocation of residents, reimbursing residents for the loss of personal funds, and other projects that benefit facility residents. States can also issue their own fines for violations of state rules, and can use those funds in any way permitted by state law. While these funds must generally be used for nursing home related purposes, and not for home and community based services, at least one state, Michigan, has used these funds for a nursing home transition program.For more information on the use of CMP funds, including state case studies, please see: “Funding for Innovation: A Review of State Practices with Civil Monetary Penalties”, The Commonwealth Fund, 2006.