What is a Corrective Action Plan (CAP) in CMS enforcement?

CMS is the federal agency responsible for administering Medicare and Medicaid, two of the largest healthcare programs in the United States. As part of its responsibilities, CMS conducts regular surveys and inspections of hospitals, nursing homes, home health agencies, hospices, and other certified providers to ensure compliance with federal Conditions of Participation (CoPs) and Conditions for Coverage (CfCs).

The consolidated Medicare and Medicaid requirements for participation for Long Term Care (LTC) facilities are codified at 42 CFR Part 483, Subpart B. These requirements were revised effective November 28, 2016, to reflect advances in the theory and practice of service delivery and safety. Deficiencies are based on violations of these regulations and are assessed based on observations of the nursing home's actual performance or practices.

These surveys are carried out by State Survey Agencies (SSAs) acting on behalf of CMS, as well as accreditation organizations that have been granted "deemed status." When a surveyor identifies that a facility has failed to meet one or more regulatory standards, the facility is cited for a deficiency. Depending on the severity and scope of those deficiencies, CMS may require the facility to submit a Plan of Correction, and in more targeted enforcement actions, a formal Corrective Action Plan.

What is a corrective action plan?

According to CMS's Division of Error Rate Measurement, a CAP is, "A step by step plan of action that is developed to achieve targeted outcomes for resolution of identified errors in an effort to: identify the most cost-effective actions that can be implemented to correct error causes; develop and implement a plan of action to improve processes or methods so that outcomes are more effective and efficient; achieve measurable improvement in the highest priority areas; and eliminate repeated deficient practices."

In practice, a CAP is a structured, written document that a healthcare provider submits to CMS (or its designee) outlining the specific steps the organization will take to correct identified deficiencies, prevent their recurrence, and demonstrate ongoing compliance with applicable regulations.

While the terms "Plan of Correction" and "Corrective Action Plan" are sometimes used interchangeably, they can have distinct meanings in formal CMS contexts depending on the program involved. For example, in the Medicare Advantage and Part D space, CMS issues formal Corrective Action Plans to health plans found to be out of compliance with program requirements. In long-term care and other provider settings, the equivalent document submitted alongside the Statement of Deficiencies (CMS Form 2567) is typically called a Plan of Correction.

Why does a CAP matter?

As the agency's Division of Error Rate Measurement notes, a CAP matters because corrective actions are not only developed but also "implemented, managed and monitored," and because the process "promotes program improvement" and ensures the "program continues to evolve."

When is a CAP required?

The legal basis for the Plan of Correction requirement is found at 42 CFR § 488.402(d), which provides that "regardless of which remedy is applied, each facility that has deficiencies with respect to program requirements must submit a plan of correction for approval by CMS or the survey agency." The only exception is for isolated deficiencies that carry a potential for only minimal harm where no actual harm has occurred.

CMS may require a Corrective Action Plan in a variety of circumstances, including:

• After a standard survey deficiency: When a facility is cited for failing to meet a Condition of Participation or a regulatory standard under 42 CFR Part 483, Subpart B, CMS or the State Survey Agency will require a written response outlining how the deficiency will be corrected.
• Following a complaint investigation: If a patient, family member, or staff member files a complaint that leads to a finding of non-compliance, a CAP may be required to address the specific issues identified.
• During focused surveys: CMS or state surveyors may return to a facility to follow up on previously identified deficiencies. If problems persist, additional enforcement actions, including revisit surveys and escalated sanctions, may follow.
• In Medicare Advantage and Part D oversight: CMS's Medicare Parts C and D Oversight and Enforcement Group (MOEG) issues CAPs to Medicare Advantage Organizations (MAOs) and Part D plan sponsors that fail compliance audits or program integrity reviews.
• After a special focus facility designation: Nursing homes placed on the Special Focus Facility (SFF) list due to persistent, serious deficiencies face scrutiny and are expected to demonstrate improvement through ongoing corrective actions.
• Under PERM (Payment Error Rate Measurement): In the Medicaid and CHIP context, states that receive error rate notifications are required to submit CAPs to CMS. As CMS directs, states "must submit CAPs to CMS no later than 90 calendar days after state error rate notifications have been released."

The seven steps to an effective CAP

CMS's Division of Error Rate Measurement outlines a seven-step framework for building an effective Corrective Action Plan:

Step 1: Select the right corrective action team members;

Step 2: Identify all errors and deficiencies;

Step 3: Determine the underlying cause of the error, not just the surface cause, and don't take any short cuts;

Step 4: Brainstorm corrective actions for each error or error trend identified;

Step 5: Perform a cost benefit analysis to determine which corrective actions are most cost effective;

Step 6: Set achievable deadlines, targets and milestones;

Step 7: Evaluate and monitor the corrective action progress.

The framework applies broadly, not just to PERM state submissions, but as a best-practice model for any provider navigating a CMS enforcement action.

What does a CAP include?

While the exact format required may vary by program or enforcement action, an effective Corrective Action Plan generally addresses:

1. Root cause analysis: Before a facility can correct a problem, it must understand why the problem occurred. A thorough CAP identifies the underlying causes of each deficiency.

2. Corrective actions: This section describes the specific steps the facility will take to fix the problem. Actions may include revising policies and procedures, implementing new care protocols, updating documentation practices, retraining staff, or restructuring oversight processes.

3. Implementation timeline: The CAP must include realistic timelines indicating when each corrective action will be completed.

4. Monitoring and sustainability: This section explains how the facility will ensure the problem does not recur. Quality assurance and performance improvement (QAPI) processes, auditing schedules, supervisory oversight, and ongoing staff education are all commonly used monitoring mechanisms.

CMS further requires that CAPs include an evaluation component which is an assessment of whether previous corrective actions achieved their intended results, and if not, an explanation of why actions were discontinued, modified, or replaced.

Read also: How to create an effective corrective action plan

The consequences of non-compliance

Under 42 CFR Part 488, Subpart F, CMS and the State may impose one or more remedies when a facility is out of compliance with Federal requirements. The severity of the remedy depends on the level of harm. Deficiency severity is evaluated across four levels: no actual harm with potential for minimal harm; no actual harm with a potential for more than minimal harm that is not immediate jeopardy; actual harm that is not immediate jeopardy; and immediate jeopardy to resident health or safety.

The enforcement timeline under 42 CFR § 488.412 notes that CMS must deny payment for new admissions when a facility is not in substantial compliance within three months of the last day of the survey, and must terminate the provider agreement if substantial compliance is not achieved within six months.

CMS's full range of enforcement tools includes:

• Civil Monetary Penalties (CMPs): Fines that can reach thousands of dollars per day or per instance of non-compliance.
• Denial of payment for new admissions: CMS can prohibit a facility from receiving Medicare or Medicaid payments for new patients.
• Temporary management: CMS may appoint a temporary manager to oversee facility operations (42 CFR § 488.415).
• Directed plan of correction: CMS or the State may impose a directed plan of correction specifying exactly what steps a facility must take (42 CFR § 488.424).
• Termination of provider agreement: In the most serious cases, CMS can terminate the facility's Medicare and/or Medicaid certification, effectively ending its ability to serve these patient populations.

For Medicare Advantage and Part D plans, non-compliance can result in civil monetary penalties, enrollment sanctions, and contract termination.

FAQs

How long does CMS take to review and approve a submitted CAP?

Review timelines vary depending on the severity of deficiencies and the program involved.

Can a facility appeal a deficiency finding before submitting a CAP?

Yes, facilities generally have the right to dispute survey findings through an informal dispute resolution process while still being required to submit a corrective plan.

Can a facility hire outside consultants to help develop their CAP?

Facilities can use healthcare compliance consultants or legal counsel to assist with drafting and implementing a CAP.