Nursing Home Staffing and Finances and the Industry’s Response to “Historic” CMS Mandates

One of the longest running issues in the operation of nursing homes is adequacy of staffing to provide safe care.  The staffing issues intensified with the COVID pandemic but have not truly eased over the last two years, especially as the constant search for qualified workers is up against immigration restrictions, wage competition in health care, lack of reality-based public funding support, and the “drift” away from personal services in almost all employment sectors.  

Nonetheless, the current Administration and  CMS are not accepting “crisis” arguments as an automatic excuse for inadequate staffing.  In April 2024, the Centers for Medicare and Medicaid Services (CMS) issued final rules for “Minimum Staffing Standards for Long-Term Care Facilities” and “Medicaid Institutional Payments Transparency Reporting.”  An April 24, 2024 CMS “Fact Sheet” summarizes the mandates which include phased implementation dates:

Central to this final rule are new comprehensive minimum nurse staffing requirements, which aim to significantly reduce the risk of residents receiving unsafe and low-quality care within LTC facilities. CMS is finalizing a total nurse staffing standard of 3.48 hours per resident day (HPRD), which must include at least 0.55 HPRD of direct registered nurse (RN) care and 2.45 HPRD of direct nurse aide care.  . . . 

 

CMS is also finalizing enhanced facility assessment requirements and a requirement to have an RN onsite 24 hours a day, seven days a week, to provide skilled nursing care. . . . 

 

The Medicaid Institutional Payment Transparency Reporting provisions, finalized in this rule, are designed to promote public transparency related to the percentage of Medicaid payments for services in nursing facilities and ICFs/IID that is spent on compensation to direct care workers and support staff. . . . 

 

Highlights from the Medicaid Institutional Payment Transparency Reporting provisions include: 

• New institutional payment reporting requirements requiring states to report to CMS on the percentage of Medicaid payments for services in nursing facilities and ICFs/IID that is spent on compensation for direct care workers (such as nursing and therapy staff) and support staff (such as housekeepers and drivers providing transportation for residents). These requirements apply regardless of whether a state’s LTSS delivery system is fee-for-service or managed care. . . . 
• Support for quality care and worker safety by excluding costs of travel, training, and personal protective equipment (PPE) from the calculation of the percent of Medicaid payments going to compensation. . . . 
• Promoting the public availability of Medicaid institutional payment information, by requiring that both states and CMS make the institutional payment information reported by states available on public-facing websites.”

I turned to the latest issue (June 2024) of McKnights Long-Term Care News to see industry-friendly viewpoints.  The public website often includes select articles from the subscription-based News.  I was especially struck by a new Opinion piece by the Executive Editor of this industry-focused media source.  Under the headline for the article that seems still to be behind a paywall, “A Dangerous Game of Chicken for Nursing Homes,” James Berklan begins:

The federal government’s first-ever nursing home staffing mandate can be a very dangerous thing  Just maybe not for the reason that many have been portraying. 

 

The administration has stuck its neck out to do what no other had done before it.

 

At the same time, providers are sticking their necks out by doubling down on their poor-mouthing platform.  The one-size-fits-all, unfunded mandate will put countless operators out of business, is the party line. . . .

 

Will enough skilled nursing operators actually start to go belly-up or leave the business and not get replaced by some other operator?

 

In brief, if the final rule’s main staffing provisions go fully into effect in a few years and there’s not enough loss of skilled nursing capacity, this turns from being a dangerous game of chicken into more like a reputation-killing case of crying wolf.  

 

So, now the intrigue builds.  What happens if the free-market forces continue, as they are wont to do in this country, and investors keep acquiring facilities?

 

Given the billions of dollars currently in play in US long-term care, it would be foolish to think there won’t be certain players still looking to make a buck on this business. . . . . 

 

It seems that the government, or at least the current administration (hint) is fully in the consumer-worker camp that believes providers are simply hoarding their reserves, and are able to save their own hides.

 

Clearly, the feds believe they have the upper hand in calling operators’ bluff.”

 

In my Elder Law Prof Blog post from earlier this week, focusing on private equity investment in nursing homes, I quoted the title from a newspaper’s op-ed, using the phrase “tipping point.”  It does seem that the feds and the industry agree that somehow the issue of adequate staffing — with qualified workers — who expect appropriate pay — is indeed a key “tipping point” for care-connected senior living.