October 12, 2023

CMS Proposes Stricter Nursing Home Staffing Standards: The $6.8 Billion Question

By Yasmeen Elhaj, Supervisor, Advisory Services

CMS Proposes Stricter Nursing Home Staffing Standards: The $6.8 Billion Question Senior Living Services

On September 6, 2023, the Centers for Medicare and Medicaid Services (CMS) released its Proposed Rule on Minimum Staffing Standards for Long-Term Care Facilities in the Federal Register. This has raised issues as nursing homes struggle with how to meet the upcoming requirements should they become final. The proposed rule requires 2.45 nursing assistant (NA) hours per resident per day (HPRD) and 0.55 registered nurse (RN) HPRD, and for facilities to have an RN on site 24 hours per day. Studies show that most nursing homes are currently not in compliance with the proposed staffing rule.

CMS estimates a cost of $4 billion annually to meet the staffing requirements. However, recent studies project nursing homes spending an annual $6.8 billion to comply with the staffing mandate. The higher cost is due to the utilization of the fiscal year 2022 reports, which had larger compensation expenses compared to 2021. Because Medicaid is the largest funder of nursing home care in the US, covering about 65% of residents and payments, many policy experts say the only way to meet this gigantic cost is through the Medicaid system. Some may argue that Medicaid programs across the United States are struggling with the payment systems and that the added pressure of supporting the staffing rules may not be feasible. This poses the question of whether or not CMS will step in and require state Medicaid programs to increase reimbursement to support the proposed rule.

Because of the pandemic, staffing shortages within the healthcare realm, particularly nursing homes, have increased and never recovered. The current unfunded proposed mandate does not provide solutions to the staffing shortage, which can cause residents to be released or, ultimately, the closing of the nursing home. It is estimated that 750 – 1200 nursing homes will go out of business as a direct effect of the staffing mandate. This will bring the number of nursing homes closed since 2018 to over 10%. Moreover, if nursing homes do not hire the required staff, approximately one-quarter of all residents, about 280,000, could be affected by census limitations. In summary, the supply of RNs and CNAs does not currently meet the demand of the proposed staffing rule, which can cause detrimental results within nursing homes if proper solutions are not implemented.

While CMS expects nursing homes to comply with the staffing mandate, there will be a temporary hardship exemption for those facilities that qualify. Before being considered, the nursing facility must be surveyed to evaluate the health and safety of the residents. To qualify, they must exhibit the following:

  • Workforce unavailability based on their location, as evidenced by either a medium (that is, 20 percent below the national average) or low (that is, 40 percent below the national average) provider-to-population ratio for the nursing workforce, as calculated by CMS.
  • Good faith efforts to hire and retain staff through the development and implementation of a recruitment and retention plan shown by documenting job postings and job vacancies, including the number and duration of vacancies, job offers made, and competitive wage offerings.
  • A financial commitment to staffing by documenting the total annual amount spent on direct care staff.

The final chapter on this matter has yet to written, and there will be revisions and updates to the proposed rule in the near future. There will be a 60-day comment period, and comments must be submitted to the Federal Register by November 6, 2023. Marcum’s healthcare team will bring you the latest information as it becomes available.

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Senior Living Services, Healthcare