Federal Initiatives that May Affect Nurse Staffing Levels

This project has produced a series of short papers evaluating various state approaches to improving nurse staffing levels at nursing facilities.  The papers have addressed state-mandated nurse staffing levels, wage pass-throughs, increasing reimbursement, and public and private (non-tort) litigation. 

This paper, in contrast, considers whether regulatory changes at the federal level, while not specifically directed at the goal of increasing nurse staffing, have actually led, or may potentially lead, to improved staffing levels at nursing facilities.  These federal regulatory changes include the federal website, Nursing Home Compare and its Five-Star Quality Rating System, as well as hospital readmission penalties, bundling demonstrations, and the Payroll-Based Journal.  This paper briefly describes these initiatives and considers how their use has affected, or could potentially affect, nurse staffing levels, now and in the future.

Nursing Home Compare and the Five-Star Quality Rating System

In July 1998, the Clinton Administration created the federal website known as Nursing Home Compare as part of the President’s multi-faceted Nursing Home Initiative.  Ten years later, the Centers for Medicare & Medicaid Services (CMS) added the Five-Star Quality Rating System in order to combine the various and increasing pieces of information that were posted on the website into more readily understandable summary scores on three individual domains – health surveys, staffing, and quality measures – and on an overall or composite score that combines the three domains. 

Each of the three individual domains in the Five-Star Quality Rating System is scored on a scale of one to five stars, with one star reflecting the poorest performance and five stars reflecting the best performance.  The composite rating begins with the health survey domain, which is based on unannounced annual and complaint surveys conducted by state survey agencies, and adds or subtracts one star based on the performance on the self-reported, but unaudited domains of staffing and quality measures. 

The New York Times reported in August 2014 that facilities game the Rating System by reporting high staffing and quality measure scores.[1]  This reporting was confirmed by CMS’s contractor, Abt Associates,[2] and by independent research conducted by the Brookings Institution.[3]

Despite its limitations, the Rating System has had an impact on consumer and provider behavior.  CMS’s purpose in creating the Rating System was to make it easier for consumers to understand and use the information on the website.  Research found that once CMS published the Five-Star Quality Ratings on Nursing Home Compare, families shifted their placement decisions.  Families were less likely to choose one-star facilities and more likely to choose five-star facilities.[4]

As discussed below, the use of the Rating System in other federal initiatives has affected and may continue to affect provider behavior as other entities and programs have begun to rely on its information as a method of evaluating facility performance.  Since facilities can boost their overall ratings by their staffing and quality measure reports, they have had an incentive to report high staffing scores, and, in some, but fewer, instances, to actually increase their staffing levels.

Hospital Readmissions

Section 3025 of the Affordable Care Act (ACA) established the Hospital Readmissions Reduction Program to reduce payments to acute care hospitals for having excessive rates of readmissions, effective for discharges beginning October 1, 2012.[5] 

Hospitals looking for skilled nursing facilities (SNFs) to which they can discharge residents, with less concern about readmissions, are looking at SNFs’ Five-Star Ratings.

Accountable Care Organizations

Accountable Care Organizations (ACOs) are groups of health care providers that coordinate care for their Medicare patients.[6]  Final regulations for Shared Savings Programs, including ACOs,[7] authorize waiver of the statutory three-day inpatient hospital stay requirement[8] for SNFs that receive three or more stars on CMS’s Five-Star Quality Rating System.[9]

Having such ratings is important to SNFs that want to participate in ACOs and other Shared Savings Programs and may motivate SNFs to increase their nurse staffing levels.

Bundling Demonstrations

The Center for Medicare and Medicaid Innovation, also established by the ACA, implemented the Comprehensive Care for Joint Replacement (CJR) Model to pay a bundled payment to hospitals, covering a 90-day period after discharge from the hospital, for care of patients with hip and knee replacements.  The Model, a mandatory program that was implemented in April 2016 in 800 hospitals nationwide, waives Medicare’s three-day inpatient hospital stay requirement for SNFs that have an overall rating of three stars or higher on CMS’s Nursing Home Compare website for at least seven of the 12 prior months.[10]

The CJR Model encourages facilities to report data for the staffing and quality measure domains that will give them at least a three-star overall rating for at least the required time period.

Payroll-Based Journal

Section 6106 of the ACA requires nursing facilities

to electronically submit to the Secretary direct care staffing information (including information with respect to agency and contract staff) based on payroll and other verifiable and auditable data in a uniform format (according to specifications established by the Secretary in consultation with such programs, groups, and parties).[11] 

The Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act) included specific funding for this statutory mandate.[12] 

Final regulations implementing the ACA’s staffing mandate and creating what CMS calls the Payroll-Based Journal (PBJ) were published in the Fiscal Year 2016 SNF Medicare reimbursement rule.[13]  

Since July 1, 2016, facilities have been required to submit staffing data through the PBJ.  Although CMS is still reporting facilities’ self-reported data on Nursing Home Compare, at some point in the near future, CMS is expected to begin reporting the PBJ data on the federal website.  

The publication of more accurate, PBJ-based nurse staffing data on Nursing Home Compare may motivate facilities to increase their nurse staffing levels.

Conclusion

Initiatives to change federal health care policy that are designed and intended to support better coordination among various providers of care are leading to increased attention to the quality of care provided by potential partners.  One way to determine whether SNFs are providing high quality care, at least as an initial screen, is to look at Nursing Home Compare and the Five-Star Quality Rating System.  Federal initiatives that explicitly use ratings reported on Nursing Home Compare may help lead to higher staffing levels at SNFs.

Toby S. Edelman
April 4, 2017