The Centers for Medicare & Medicaid Services granted a huge and problem-plagued nursing home in San Francisco a new lifeline this week.

CMS will allow the 769-bed Laguna Honda Hospital & Rehabilitation Center to continue participating in the Medicare and Medicaid programs after negotiating with the city and county of San Francisco.

The home earlier this year has begun to shut down under threat of stopped federal payments, leading to several patient deaths after discharge.

“All parties are committed to ensuring that, regardless of income, people living in nursing homes are receiving safe, high-quality services and support,” said a joint statement from CMS, the California Department of Public Health, the city and county. “We are all focused on resident well-being while Laguna Honda continues to provide critically needed healthcare services for hundreds of residents.”

The government entities reached an agreement in principle to settle ongoing administrative proceedings and federal court litigation. CMS had suspended payments after two non-fatal overdoses at the facility in 2021. CMS then ordered the facility to transfer its residents by Sept. 13, 2022, and four residents died during that process. 

The San Francisco Department of Public Health and the city’s congressional representatives asked CMS to halt the transfers, and the agency did so at the end of July. Laguna Honda has a two-star rating at Medicare.gov and the red hand icon given to facilities cited for abuse.

“As part of the settlement, CMS will extend Medicare and Medicaid payment for services through Nov. 13, 2023, contingent on Laguna Honda meeting requirements aimed at making health and safety improvements at the facility,” said the statement.

“During this period, Laguna Honda will continue to work on quality improvement efforts while aiming to reapply to participate in Medicare and/or Medicaid. Additionally, transfers and discharges of current residents will remain paused until Feb. 2, 2023, with a possibility of a further extension if Laguna Honda complies with its obligations under the settlement agreement.”

The city will submit “shortly” the settlement agreement in principle to the health commission and board of supervisors of the city and county.