Federal Government to Release Millions of N95 Masks to Nursing Homes — But at a Price

The federal government will soon open up its strategic stockpile of N95 respirators to nursing homes and other health care providers, according to a report, but at least a portion of the distribution will be made through the open marketplace.

The Trump administration this week sent information to governors on how health providers in their states can access approximately seven million N95 masks from the Strategic National Stockpile, a federal cache that currently has 44 million N95s on hand with 500 million more on order, Bloomberg Law reported.

But unlike other efforts to provide direct aid to nursing facilities, this initiative would rely in part on the existing medial supply marketplace, at least according to the report.

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In addition to providing masks that are currently on hand, the federal plan — devised by Navy Rear Adm. John Polowczyk, the official in charge of the personal protective equipment (PPE) stockpile — would also direct mask makers Honeywell and O&M Halyard to stop filling contractual orders for the federal government and instead direct masks to nursing homes, hospitals, and other care settings, Bloomberg reported.

Those masks would flow “into the commercial market,” this month and next, where they would be available for nursing homes to purchase, Polowczyk told Bloomberg.

The Centers for Medicare & Medicaid Services (CMS) and Department of Health and Human Services (HHS), which have directly overseen relief efforts at nursing homes throughout the pandemic, did not respond to requests for comment and more details about the plan as of press time Wednesday.

A spokesperson for the Strategic National Stockpile late Wednesday indicated that the exact details of the plan, and how the masks would be distributed within the marketplace, were still under development.

The news comes as both the federal government and the nursing home industry have sounded alarms about rising case COVID-19 case counts in the setting.

CMS administrator Seema Verma last week said the agency is “deeply concerned” about an uptick in infections at nursing homes, placing the blame in part on persistently poor infection control practices; CMS also last week announced $15 million in COVID-related fines assessed to nursing homes since the start of the pandemic.

The weekly number of new cases in nursing homes as also exceeded its previous peak in May, the American Health Care Association reported in an analysis released Monday. The trade group pointed to spiking community infection rates in the Sun Belt states — which accounted for 78% of new nursing home cases during the week ended July 26 — as the primary driver of the trend.

“With the recent major spikes of COVID cases in many states across the country, we were very concerned this trend would lead to an increase in cases in nursing homes and unfortunately it has,” AHCA CEO Mark Parkinson said in a statement. “This is especially troubling since many nursing homes and other long-term care facilities are still unable to acquire the personal protective equipment and testing they need to fully combat this virus.”

The president in April announced an ambitious plan, backed by the Federal Emergency Management Administration (FEMA), to distribute two weeks’ worth of PPE to all nursing homes by July 4; that effort descended into chaos as reports of incomplete shipments and defective equipment from nursing homes across the country flooded local and national news outlets.

HHS has also distributed billions in aid to nursing homes through various CARES Act stimulus programs, with operators generally required to spend the relief cash on COVID-related expenses such as PPE and staffing.

But providers in the space have argued that the largesse so far has not been sufficient to meet skyrocketing costs, with industry giant Genesis HealthCare (NYSE: GEN) indicating that it may not survive the strain even with additional funding.

About 40% of respondents to an AHCA-commissioned survey of nursing home operators indicated that they could not stay in business at their current expense burdens over the next six months, with 72% saying they couldn’t last another year at this rate.

Fifty-five percent of providers are currently operating at a loss, the AHCA survey found, with 97% experiencing some kind of revenue hit.

“This has been largely driven by the increase in costs responding to COVID-19 (personal protective equipment [PPE], additional staffing and testing) and Medicaid’s underfunding, which only covers 70 to 80% of the actual cost of care,” AHCA observed.

Prices for key PPE items in early outbreak states such as New York and New Jersey skyrocketed in April on the open market, with N95 masks manufactured by 3M jumping from 11 cents apiece to $6.75 — a markup of more than 6,000%, if they were available at all.

Carol Silver-Elliott, CEO of the New Jersey-based provider Jewish Home Family, in May described how a mysterious contact known only as “Parking Lot Guy” — based on his preferred spot for doing PPE deals — became her organization’s top source for supplies as it spent more on PPE in one month than it normally did in an entire year.

“We’ve been able to take a deep breath and wire money to bank accounts we’ve been told to wire money to, and the supplies thankfully have appeared — and have also been of good quality,” Silver-Elliott said at the time.

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