At the end of May, CMS sent to the White House for approval a proposed rule that would establish minimum staffing levels for long-term care facilities, including nursing homes.
The objective is part sincere policy with a large side helping of politics. President Joe Biden has been an ardent advocate for organized labor for most of his career. Like most political leaders with that penchant, he has found it increasingly difficult to be effective in his support.
There have been few growth opportunities for union membership in recent years as industries like transportation have consolidated and as manufacturing has moved off-shore. Growth in union membership of state and federal government employees has slowed as contract labor replaced direct hires. Teacher unions have been under pressure from declining enrollments.
Health care has presented a savory opportunity for labor organizers as the sector and its share of GDP has grown. However, it has proven difficult to organize. Unions, specifically the SEIU, whose members are almost exclusively low wage/low skill workers, tend to have more luck organizing in the home health, dialysis, and skilled nursing service sites.
With President Biden’s election, the SEIU and some of the regional nurse unions have stepped up their activism knowing they had a friend in the White House. One tactic since 2021 has been to deploy the regulatory system to expand employment in home and long term care.
As part of the American Recovery Act, the Biden administration proposed a $400B appropriation to state, local, tribal and territorial government to fund expanded Home and Community-based Services in Medicaid. It was included and ultimately stripped out of both the American Rescue Plan Act and the Inflation Reduction Act.
After these legislative failures, the administration has now proposed what is, in it effect, a maximum operating margin for providers of Home and Community-based Services in the Medicaid program.
Another site of service that has been the focus of labor organization is institutional long-term settings like nursing facilities. Unlike the plain political motives for leaning into the regulatory system to support unionizing labor in home care, expanding the head count for nursing homes has some policy work to back it up.
Since about 2000, there have been a number of studies that support the conclusion that high staffing ratios, especially for nurses, result in better patient outcomes. That should be obvious. The more pertinent question is how much more staffing is necessary as we consider what the White House may propose in their new rule.
Current Standards
Most states have some type of staffing requirements. These almost always require that staffing be sufficient to protect the well-being of patients. There is usually a general requirement to employ an RN at least part of a 24-hr day. Additional requirements include off-hours staffing with LPNs.
Many states require minimum Hours Per Resident Day for direct care staff. These minimums can range from 2-2.5 to 4 HPRD. Some states, like Kentucky, have no minimum direct care staffing requirement.
The federal government through its Medicare program has a general requirement that staffing be sufficient to protect the well being of residents. It also requires an RN to be on duty for eight consecutive hours, seven days a week. The remaining shifts can be manned by RNs and/or LPNs. Facilities must employ an RN as a full-time Director of Nursing five days a week.
At the federal level there is no requirement for a minimum HPRD.
Consumer Voice, an advocacy group for minimum HPRD has produced a handy chart of state-level requirements.
Proposed Federal Requirements.
As the federal government already has general supervisory requirements, the fight now is over staffing minimums for Direct Care. Staffing ratios for Direct Care are generally divided into three parts, Certified Nurse Assistants or Nursing Aides, Licensed Practical Nurse or Licensed Vocational Nurse, and Registered Nurse.
The debate centers on whether there should be a hard minimum of HRPD or be tiered to accommodate acuity levels. At last look, the White House appeared to be considering a more flexible approach based on patient needs.
A study released in 2020 provides a methodological approach for setting staffing minimums based on acuity levels. It concludes:
It is hard to know how far nursing facility staffing deviates from these study results today with limited data on acuity. We also cannot assess the knock-on effects. A patient who requires almost 7 hours of care per day is also likely to be a patient who is not admitted if staffing is unavailable.
What we can do is compare Community Voice’s stated goal of 4.1 combined hours of care to the most recently reported ratios (June 2023)
After eliminating all facilities with less than 10 residents and those that did not report a ratio for any of the three categories – nurses aid, LPN/LVN and RN – the national averages are:
- Nurse’s Aid Hours Per Resident Day = 2.213
- LPN/LVN Hours Per Resident Day = 0.88
- RN Hours Per Resident Day = .63
- Total Hours Per Resident Day for Licensed Staff = 3.72
In other words, across the nation, staffing ratios are about 0.38 hours below the mandate level sought by patient advocates and organized labor.
In June, there were 1.1M Average Residents Per Day which implies that 418k staff hours would need to be added each day (1.1M * 0.38). The going rate for nursing facility staff is $24.00 (nonsupervisory). So, the total estimated impact, industry-wide, would be about $10M/day or $3.6B per year.
Total Medicare and Medicaid expenditures for nursing home and continuing care retirement centers is about $100B.
In the alternative, the nursing home industry could reduce resident patient days by a similar percentage of 10%.
Impacts.
The large public nursing home operators are adept at concealing ownership despite CMS’s best efforts. However, the Nursing Home Compare data provides a sample. We were able to identify 244 facilities affiliated with ENSG. Of these, the average Total Nurse Staffing Hours Per Resident Per Day was 3.58 in June for 18,462 Average Residents Per Day.
NHC fares better. In June it reported 3.92 HPRD on 6,600 Average Residents Per day.
Data for all nursing facilities can be found here.
Outcomes.
Extra SG&A is certainly not what the industry needs. However, as I pointed out on Tuesday, nursing facilities are subject to a forecast error adjustment. Meaning, if the CMS contractor that models the prospective payment system gets their estimate wrong, CMS will adjust future years to correct. For the 2024 payment update, the CMS contractor was 3.6% too low in 2022 so the payment update was higher than expected. The same is likely to be true for 2024 as the CMS contractor is treating inflation as transitory rather than permanent. Not a perfect solution, of course, but better than the alternative experienced by other sites of care.
Another path for softening this blow could be additional funding. Like most payment systems, the Skilled Nursing PPS uses weights based on annually submitted cost reports. These reports are retrospective and would not include increased labor expense due to staffing minimums.
In nearly all reimbursement circumstances, Congress has given the SecHHS discretion to consider “other factors” when updating reimbursement. If the White House wishes to accomplish the goal of increasing the size of the workforce and hence its organized members, it could consider a temporary add-on payment until the SNFPPS is rebased and takes into consideration additional costs.
In the end, the most immediate solution – depending on implementation – will be to reduce admissions. We have seen this phenomenon across payment silos, especially in dialysis. Unlike the renal dialysis center payment silo, a reduction at nursing homes may not be as perceptible. As the job market has slackened, labor expense increases have slowed making staffing optimization a little easier.
Finally, nearly every staffing minimum at the state level creates an exception system. When minimums cannot be met in light of demand, most states will issue temporary waivers. I would expect a similar provision to emerge as part of any federal mandate.
Please let me know if you have additional questions.
Emily Evans
Managing Director – Health Policy
Twitter
