Nursing home operators, owners, and their trade associations continue their relentless opposition to the federal nurse staffing rule that the Centers for Medicare & Medicaid Services (CMS) publicly released on April 22, 2024. They repeat their longstanding claims that there’s no one to hire, the staffing rule is an unfunded mandate, facilities will close and older people will have nowhere to go for care. These claims are not true and cannot withstand analysis.
No one to hire?
Facilities claim that they cannot meet the staffing requirements of the final rule because there is no one to hire. However, the Abt 2023 staffing study used by CMS to draft the staffing rule found that non-profit and government-operated nursing facilities already exceed the 3.48 hours per resident day (HPRD) of nursing staff, employing more than 4.2 and 4.1 HPRD, respectively, of nursing staff today. Why does Leading Age, the trade association of non-profit nursing facilities, object to the 3.48 standard that its own members already exceed? Moreover, according to the Abt 2023 staffing study, even during the pandemic, nursing facilities staffed at 3.76 HPRD and for-profit facilities, the most poorly staffed segment of the nursing home industry, staffed at 3.57 HPRD. What is the objection now to 3.48, which will not even be in effect until 2027 for non-rural facilities and 2029 for rural facilities?
Another component of the final rule is a requirement for a registered nurse to be on-site in every nursing facility, 24 hours per day, seven days per week, beginning in 2026 for non-rural facilities and in 2027 for rural facilities. Both national nursing home trade associations, American Health Care Association and Leading Age, wrote and supported Care for Our Seniors Act which, among its provisions, called for registered nurses 24 hours per day, seven days a week – exactly what the final staffing rule mandates. Why are they objecting now?
The trade associations argue that facilities will be forced to use expensive nurse staffing agencies to get nurses to work in their buildings. The fact that staffing agencies employ nurses shows that the issue is not the lack of nurses in the country; the issue is the lack of nurses who want to work for nursing facilities. If nursing homes were more desirable places of employment, more nurses would be willing to work for them. The industry claims that the paraprofessional nursing staff, certified nurse aides, are also in short supply. The reasons are clear. When nurse aides are paid poverty-level wages with limited benefits, are fired for mistakes caused by lack of sufficient staff, endure poor working conditions that, according to the federal Bureau of Labor, make nursing home employment for aides one of the most dangerous jobs in the country, and hear endlessly from nursing home owners, operators, and their trade associations that facilities are understaffed and will close, it is no wonder that people choose other employment, especially in times (like now) of low unemployment. Improving the working environment would help nursing homes hire and retain nursing staff.
Unfunded mandate? Facilities need more money?
For decades, federal law has explicitly required nursing homes to provide nursing care to their residents. The federal Nursing Home Reform Law requires nursing homes that voluntarily participate in the Medicare or Medicaid programs, or both (and most nursing homes participate in both payment programs) to provide nursing services “to attain or maintain the highest practicable physical, mental, and psychosocial well-being of each resident.” 42 U.S.C. §§1395i-3(b)(4)(A)(i), 1396r(b)(4)(i), Medicare and Medicaid, respectively. The federal regulation at 42 C.F.R. §483.35 describes the nurse staffing standard, requiring facilities to have
sufficient nursing staff with the appropriate competencies and skills sets to provide nursing and related services to assure resident safety and attain or maintain the highest practicable physical, mental, and psychosocial well-being of each resident, as determined by resident assessments and individual plans of care and considering the number, acuity and diagnoses of the facility’s resident population in accordance with the facility assessment required at § 483.70(e).
How is providing appropriate levels of nursing care, a legal requirement since 1990, an unfunded mandate?
Moreover, the federal payment programs already provide a significant amount of reimbursement that can and should be used for care. Recent studies (here, here, and here) and articles (here and here) document that nursing homes hide profits in related party transactions, diverting public reimbursement that should be used for staff to private personal gain for owners and operators.
For example, “Tunneling and Hidden Profits in Health Care,” a recent study by economists Ashvin Gandhi and Andrew Olenski, found that facilities in Illinois hid 62.9% of their profits by paying inflated prices to related parties. They calculated that if these hidden profits were spent on staff, mean staffing ratios would significantly increase – by nearly 0.23 hours per resident day (HPRD) of registered nurse (RN) time, a 28.9% increase, or by 0.47 HPRD of certified nurse aide (CNA) hours per resident day, a 21.0% increase. Moreover, if facilities’ hidden profits were spent on staff, facilities would be much closer to already complying with the staffing hours identified in the Biden Administration’s proposed staffing ratio rule (now mandated by the final rule). Compliance with the 0.55 HPRD RN requirements would rise from 55.2% to 75.6%; compliance with the proposed 2.45 HPRD certified nurse aide (CNA) standard would rise from 15.3% to 36.1%.
In addition, the two independent agencies responsible for advising Congress on Medicare and Medicaid policies do not support industry claims of underpayment.
To the contrary, the Medicare Payment Advisory Commission (MedPAC), which advises Congress on Medicare policy, reports that nursing homes’ Medicare margins for freestanding skilled nursing facilities have exceeded 10% every year since 2000 and were 18.4% in 2022. In March 2024, MedPAC recommended a cut in Medicare reimbursement by 3%. CMS proposed an increase of 4.1%.
The Medicaid and CHIP Payment and Access Commission (MACPAC), which advises Congress about Medicaid policy, reports, in a January 2023 issue brief and in the March 2023 Report to Congress, that they cannot determine the adequacy of Medicaid payments to nursing homes because they do not know how much Medicaid reimbursement, in total, facilities actually receive and because they do not know how and where facilities spend the money they receive.
Just this week, Members of Congress called out corporations’ additional schemes to hide profits. On May 6, 2024, Senators Warren (D, MA), Blumenthal (D, CT), and Sanders (I, VT), and Representatives Doggett (D, TX) and Schakowsky (D, IL) sent letters to three of the largest public, for-profit long-term care chains in the country, “highlighting the discrepancy between their opposition” to CMS’s staffing rule and “the industry’s massive payouts in buyouts, dividends and salaries to executives and shareholders, totaling almost $650 million dollars since 2018.” The letter to the Ensign Group, for example, calls the nursing home industry’s opposition to the staffing rule “alarming” and points out that between 2018 and 2023, Ensign paid dividends to shareholders and completed stock buybacks totaling $145,200,000 and, between 2018 and 2022, paid its top executives $144,802,846, “additional evidence that nursing homes can afford to meet higher staffing standards, but are simply unwilling to do so.”
Moreover, nursing homes not only receive direct reimbursement through the Medicare and Medicaid programs; they are also heavily-subsidized by taxpayers through additional public spending. Large portions of facilities’ staff – particularly nurse aides, food services staff, and housekeeping staff – are paid such low wages that they qualify for needs-based public benefits (such as Medicaid, food assistance, housing assistance, heating assistance, and more). Facilities also received billions of additional dollars during the coronavirus pandemic from the Provider Relief Fund, the Paycheck Protection Program, increased Medicaid payments, and more.
Finally, industry arguments about the inadequacy of Medicaid rates are simply implausible. If facilities had been “underfunded” for 15 years or were really losing $25 per day or $30 per day or $38 per day or $65.36 per day for the majority of their residents for multiple years, as they regularly claim, how could facilities possibly still be in business? As economists Gandhi and Olenski observed, these facilities would have closed, and long ago.
Facilities will close?
The Center for Medicare Advocacy has addressed this issue before (here and here and here). Facilities frequently close and for a variety of reasons unrelated to the staffing mandate – they provide very poor care (Special Focus Facilities and other poor quality facilities); they make business decisions to close; states have enacted deliberate policies to shift Medicaid reimbursement from nursing homes to home and community-based care and services; and implementation of the U.S. Supreme Court decision in Olmstead v. LC, 527 U.S. 581 (1999), establishing the right of people to live in the least restrictive setting (see Massachusetts’ April 2024 settlement in Marsters v. Healey, which will lead to the state’s shifting one billion dollars over the next eight years from nursing facilities to home and community-based settings).
Conclusion
The hundreds of thousands of residents and staff who died during the COVID-19 pandemic revealed problems in nursing home operations that could not be ignored. The deaths led to President Biden’s comprehensive nursing home reform agenda in 2022, which recognized the essential need to increase the numbers of nursing staff. Nursing home owners and operators must stop opposing staffing standards that will improve care for residents. Their arguments in opposition to improved staffing standards are untrue and unsupportable and only encourage individuals needing care, and potential workers, to seek other alternatives.
May 9, 2024 – T. Edelman