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Nursing Home Staffing Push Fuels Debate Over How to Pay for It

April 21, 2022, 9:35 AM

The Biden administration’s push for federal nursing home staffing requirements has entered the rulemaking phase, and industry leaders, academics, and advocacy groups are asking the same questions: How much will it cost, and who’s going to pay for it?

Spurred by the Covid deaths of more than 154,000 U.S. nursing home residents and staff, a proposal for mandatory minimum staffing levels would fulfill a decades-long quest to shore up the quality and uniformity of care in the nation’s 15,000-plus nursing homes.

Some industry critics say the facilities should pay the entire cost for any needed staff additions.

“There’s no evidence they can’t afford an increase in staffing under their current reimbursements,” said Charlene Harrington, professor emerita at the University of California San Francisco School of Nursing.

Lori Smetanka, executive director of the National Consumer Voice for Quality Long-Term Care, said nursing homes need to better account for how they spend $89 billion in annual taxpayer funding. In a statement, Smetanka called for a requirement that a specific share of nursing home revenue, “including from Medicaid and Medicare, be dedicated towards direct care.”

But industry officials, citing low Medicaid reimbursement rates, say staffing requirements are unworkable and unrealistic, especially during a time of staffing shortages, rising labor costs, depressed occupancy, and costly infection-control measures. They say higher Medicaid payments or some other federal funding is needed.

‘‘We recognize the need to hire more caregivers and offer more private rooms, among other ongoing improvements,” Mark Parkinson, president and CEO of the American Health Care Association and National Center for Assisted Living, said in a recent letter to Health and Human Services Secretary Xavier Becerra. “But we must also recognize that the government funding to bring forth these improvements is not currently there.”

Shrinking Workforce

Nursing homes have lost 238,000 positions, about 15% of their workforce, since the pandemic began, industry groups say, even as employment in other health-care settings has rebounded. And while nursing home occupancy climbed to 77.6% in the first quarter of 2022—up from a pandemic low of 74.1%—it’s still well below the pre-pandemic level of 86.6%, according to research by the National Investment Center for Seniors Housing & Care.

The Centers for Medicare & Medicaid Services will conduct a study to determine the appropriate level of mandatory care and how to finance it before announcing its plan next year. In the meantime, it has asked stakeholders to share their thoughts on the proposal.

Better staffing in nursing homes, especially among registered nurses, has been linked to improved quality of care and infection control. A 2020 study of Connecticut’s 215 nursing homes found that in facilities with at least one confirmed case of Covid-19, every 20-minute increase in RN staffing—per resident, per day—was associated with 22% fewer infections and 26% fewer Covid deaths.

A recent Kaiser Family Foundation poll found 70% of adults feel nursing homes and other long-term care facilities were doing a “bad job” of properly staffing their buildings. Eighty percent of nursing homes in Alaska reported at least one staff shortage as of March 20, according to Kaiser. Minnesota was next at 64%, followed by 59% in Maine, 58% in Kansas, and 56% in Wyoming. At 4%, California and Connecticut had the lowest rate of facilities with shortages, followed by Massachusetts at 8%, and Texas and New Jersey at 9%.

In 2001, the CMS recommended a minimum standard of 4.1 nursing hours per resident each day in order to prevent harm and ensure the safety of long-term residents. That broke down to 2.8 hours from certified nursing assistants; 0.75 hours from registered nurses, and 0.55 hours from licensed practical nurses.

Only 25% of nursing homes, however, report providing that recommended level of 4.1 hours per resident per day, said Richard Mollot, executive director of the Long Term Care Community Coalition.

$500,000 per Facility

To meet a different staffing standard that averaged the same 4.1 hours of daily care, 59% of nursing homes would have to pay an average of $500,000 per facility, or $4.9 billion nationwide, according to research by John Bowblis, an economics professor at the Miami University Farmer School of Business.

And the more Medicaid residents a facility has, the more likely it will have to increase staffing and spend more money to do so, Bowblis said. That’s because Medicaid nursing home payments have been historically low and facilities with large Medicaid populations tend to have lower quality as well, he said.

“So the only way that you’re probably going to get” mandatory minimum staffing levels “on a national basis is if you get some federal money that matches what needs to be paid” in order to meet the new mandates, Bowblis said.

The head of the American Health Care Association and National Center for Assisted Living expressed similar sentiments to Becerra.

“More than 60 percent of our residents rely on Medicaid, but the program does not adequately fund the actual cost of care,” Parkinson wrote. “Increasing staffing minimums in the midst of this workforce crisis without corresponding resources does little to help residents and would result in nearly every nursing home being out of compliance.”

Since Medicaid is jointly funded by states and the federal government, “it comes down to the political will of the state: Is this something we want to invest state tax dollar money on?” Bowblis said.

State Requirements

In the past two years, New York, New Jersey, and Massachusetts have required that a certain percentage of a nursing home’s operating-company revenue must go toward direct care, Harrington said. California is considering a similar proposal that would steer 85% of revenue toward resident care.

“So the states are finally figuring out this game that the nursing homes are playing, which is to try to pull money out of the companies and make it look like they’re losing money,” Harrington said.

In its request for comment on the staffing proposal, the CMS is interested in whether there’s “evidence that resources that could be spent on staffing are instead being used on expenses that are not necessary to quality patient care.”

These kinds of concerns have prompted the CMS to pursue more thorough reporting of nursing home profits, spending, and corporate ownership structures, since U.S. taxpayers provide most of the industry’s revenue through Medicare and Medicaid.

On Wednesday, the CMS released the first quarterly data set on nursing home ownership changes from 2016 through 2021. It showed that more than 3,200 nursing homes had changed ownership during that time.

In response, the AHCA said in a statement that it supports the pursuit of financial transparency for nursing homes and “as we seek to better understand the potential impact of nursing home ownership trends, we must also consider how the chronic underfunding of long term care interplays with the financial decisions nursing home providers may feel pressured to make.”

To contact the reporter on this story: Tony Pugh in Washington at tpugh@bloomberglaw.com

To contact the editors responsible for this story: Brent Bierman at bbierman@bloomberglaw.com; Karl Hardy at khardy@bloomberglaw.com