Meeting the Biden administration’s minimum staffing proposals for nursing homes would require facilities nationwide to hire more than 102,000 additional nurses at a cost of $6.8 billion, well above the government’s $4 billion estimate, according to a report released Tuesday by an industry group.
“That is money that is simply not out there,” Mark Parkinson, president and CEO of the American Health Care Association (AHCA) and its sister organization the National Center for Assisted Living, said during a press event Tuesday. “Even at the administration’s number of $4 billion—that’s almost $400,000 per nursing facility, and nursing facilities just don’t have that money. They will not be able to implement this proposal.”
Earlier this month, the Centers for Medicare & Medicaid Services (CMS) floated a plan to require participating nursing homes to provide a minimum of 0.55 hours of care from a registered nurse per resident per day, 2.45 hours of care from a nurse aide per resident per day and have at least one registered nurse on-site at all times.
The proposal was widely panned by AHCA and other industry groups, which said that many of their facilities are financially underwater and already struggling to find workers. Healthcare labor costs have increased in recent years due in part to the low, but somewhat improving, supply of clinical workers.
The new analysis—conducted on behalf of AHCA by professional services firm CliftonLarsonAllen (CLA)—sought to measure the gap between current nursing home’s current staffing and the burden full compliance would require using “more up-to-date” 2022 cost reports that reflect rising wage growth, Cory Rutledge, chief assurance officer at CLA, told reporters.
To date, 94% of nursing homes are falling short of at least one of CMS’ proposed staffing requirements while 36% are falling short of all three requirements, according to the report.
While about 60% of nursing homes nationwide are already in the red, Rutledge noted that the compliance burden would be heavier among the facilities more reliant on government funds. On average, facilities that currently fall short of all three requirements counted 56% of their total patient days from Medicaid patients, whereas those that did meet the criteria had a 43% Medicaid census.
Nursing homes’ alternative to more hires would be to trim down the number of residents they’re caring for. In a hypothetical where nursing homes collectively took this route, CLA found that more than 287,000 nursing home residents, or about 26% of the national total, would be impacted.
Even putting the potential impact of displacement on the residents aside, Parkinson said the resulting revenue cut would be a death knell for much of the industry.
“That would completely change the economics of the building, and no building can survive,” he said. “… If all of a sudden we had to lose roughly 25% of our population, the whole thing would collapse. And so it’s not just the 287,000 folks that are at risk of displacement—it’s really everybody that lives in a nursing home” with the exception of “some very high-end” facilities with greater private pay residents, he said.
CLA built its analysis using a combination of the most recently available payroll-based journal data and hourly rates from Medicare cost reports. The total counts of 80,077 and 22,077 additional nurse aides and registered nurses, respectively, it determined after taking the 24/7 on-site registered nurse requirement into account, Rutledge said, while the cost totals are still likely an undercount when comparing the value of today’s dollar to that of the time of implementation.
A separate report published in recent weeks by KFF painted a similarly dire picture for nursing home employers. It found that fewer than 1 in 5 nursing homes currently meet the proposed standards. Ninety percent of for-profit facilities would need to hire more staff compared to 60% of nonprofit and government facilities, according to KFF.
CMS’ proposal includes a soft on-ramp of three and five years for nonrural and rural facilities as well as exemptions for facilities that can prove they’re facing difficulties finding staff. It also provides $75 million for training nurse aides.
The administration, labor groups and advocacy groups in support of the proposal say increased staffing is necessary to improve residents' safety.
Parkinson said his group is now having open discussions with the government agencies over the proposed requirements. However, he said that whereas prior administrations had all taken the time to research staffing requirements and probe the industry while considering—and ultimately discarding—any staffing requirements, the Biden administration chose to commit to its policy before reaching out.
“Unfortunately, this administration approached this in a backward manner,” he said. “It’s not surprising that we therefore get a policy that doesn’t make sense and that can’t be implemented.”
Responding to a question about potential litigation to block rulemaking, Parkinson said the industry group's “really good” dialogues with CMS and members of Congress are “all we’re focused on right now.”
One potential fix could be supplying the industry with the funds to tackle hiring through Medicaid. Parkinson said that there’s currently not enough money in the Medicaid system to do so, and so such an approach would either require Congress to approve more funding or for CMS to take a legally dicey approach of forcing states to pay providers more in order to meet the requirement.
“We hope to continue to have discussions with the administration during this time that the rule is proposed, and we hope to be able to make an impact,” he said. “But so far, we have not been able to.”