HUD Rule Changes REAC Investigations for NFs

The US Department of Housing and Urban Development (HUD), Federal Housing Administration (FHA), has released a final rule, effective October 9, 2012, Section 232 Healthcare Facility Insurance Program-Strengthening Accountability and Regulatory Revisions Update, that revises the regulations applicable to, and closing documents used in, FHA insurance of multifamily rental projects.

Important to nursing facility providers, the FHA rule states that HUD, Real Estate Assessment Center (REAC) inspections will only be conducted in NFs if “HUD determines, on the basis of information received, such as through a complaint, site inspection, or referral by a State agency, on a case-by-case basis, that inspection of a particular facility is needed to assure protection of the residents or the adequate preservation of the project.”  This means that nursing facilities are generally exempt from REAC inspections, which are generally required of all rental housing receiving FHA insurance or other HUD funding.  

On the other hand, despite what Section 200.855 reads—Kelly Haines, Director, HUD, Office of Residential Care Facilities, Office of Health Care Programs, asserts that assisted-living facilities, board and care facilities and intermediate care facilities are not exempt from REAC inspections, and HUD is currently working on specific guidance to provide more clarification.  AHCA/NCAL submitted comments prior to the release of this final rule, specifically asking for assisted living and board and care facilities to be exempted from the REAC inspections if/when state or local government has a reliable and adequate inspection system in place.  To obtain a copy of the final rule click here.