Genesis’s Hager: With Routine Testing Likely Necessary Through End of ’21, Costs Not Sustainable

The federal government has launched several programs intended to speed up COVID-19 testing in nursing homes, but as the sector stares down a flu season with no signs of coronavirus slowdowns, a pair of top leaders on Wednesday emphasized that the testing burden is far from solved.

“We really need to understand and have a better relationship with CMS and the stakeholders in this industry to figure out how we can bridge those gaps, because I feel like there’s a cliff coming at the end of this on the reimbursement side,” Owen Hammond, CEO of skilled nursing operator Cascadia Healthcare, said during a panel discussion at the virtual Skilled Nursing News RETHINK summit. “It’s not going to match up to the requirements by CMS and the penalties that come by not following those requirements.”

George Hager, CEO of publicly traded nursing home giant Genesis HealthCare (NYSE: GEN), agreed, citing testing bills that can run in the hundreds of thousands per building per year depending on requirements.


“That is not a sustainable incremental cost without some level of funding and support to pay for that,” Hager said during the SNN discussion.

And in Hager’s view, the demand for routine testing in nursing homes is unlikely to dry up even by this time next year.

“The need for testing is with us for the foreseeable future — at least out to the end of 2021,” Hager said.


The Department of Health and Human Services (HHS) is currently overseeing a pair of parallel nursing home testing programs. In the first, which wrapped in mid-September, the federal government sent out antigen testing units to the vast majority of facilities around the country, along with a single shipment of testing supplies; operators can then purchase refills on the open market.

In the second, which remains ongoing, HHS will distribute card-based antigen tests from manufacturer Abbott. President Trump on Monday announced that 18 million of the tests will soon be sent to nursing facilities as part of a larger push to speed up the reopening of schools and businesses; about 2 million have already been shipped to facilities in COVID-19 hotspots, according to HHS.

That support comes on top of the billions in CARES Act aid distributed to nursing facilities, both in the form of direct tranches and Medicare- and Medicaid-based relief.

But the largesse also came with the threat of fines and enforcement actions: The Centers for Medicare & Medicaid Services (CMS) now requires up to twice-weekly testing of nursing home staffers, depending on the level of coronavirus spread in the surrounding county. The testing mandate is part of the baseline requirements of participation in the Medicare and Medicaid program, meaning non-compliance can result in the cutoff of a facility’s primary funding streams — in addition to penalties that can exceed $400 per day or $8,000 per instance.

“These new rules represent a dramatic acceleration of our efforts to track and control the spread of COVID-19,” CMS administrator Seema Verma said in a statement announcing the new rules late last month.

The financial impact of COVID-19 on nursing home operators has been significant, with Genesis raising “substantial doubts” about its ability to continue as a going concern last month amid skyrocketing costs — for testing, personal protective equipment (PPE), and staffing — and revenue declines associated with substantial drops in discharges from hospitals.

So far, both Genesis and Cascadia have been able to incorporate the federal antigen tests into their regular workflows, according to the CEOs; Hager even received a COVID-19 test after a suspected exposure, he said, and the company remains “cautiously optimistic” about the availability of testing-kit refills into next month and beyond.

The support has been “impactful,” Hammond said, with Cascadia primarily using the devices to perform mandatory staff screenings. In the event of false positives — which the federal government and independent analyses have confirmed are happening, generally at rates previously predicted — Cascadia has been re-testing the sample, and ordering a backup polymerase chain reaction (PCR) test if the do-over remains inconclusive.

But he also noted that the process has not been without challenges.

“It’s almost like building the airplane mid-flight,” Hammond said. “A lot of this stuff is happening — we’re trying to adjust to it. We’re trying not to crash and burn. But when we get those machines without testing strips, it makes it virtually useless for us in the field.”

To its credit, HHS has been fairly open about the fluid nature of the federal testing support for nursing homes, with assistant health secretary Adm. Brett Giroir echoing Hammond’s words when rolling out the program back in mid-July.

“The situation is much too urgent to wait a few months so we can put bows and lipstick on the program,” Giroir said. “So we’re going to build this plane a little bit while we’re flying it.”

At that time, the peak of the pandemic’s impact had mostly passed Genesis’s home market of the Northeast, which weathered the first COVID-19 blows in the United States particularly hard. For Cascadia, which predominately operates in the Northwest and Mountain West, the first COVID-19 positive wasn’t confirmed until June 25, clearly illustrating the disparate impact of the pandemic across regions.

As summer turns to fall and an uncertain winter lies ahead, the nation has largely transitioned into the maintenance phase of the pandemic — no longer dealing with the large-scale chaos of its earliest days, but instead trying to manage the virus like the chronic problem without a cure that it is.

And for nursing home operators in particular, the strains are unlikely to ease anytime soon.

“It’s probably, with our facilities, about $20,000 a week to do the testing per building, and I just don’t see that as sustainable for anybody — especially a smaller company like ours. We have 22 facilities,” Hammond said. “I know there’s been CARES Act funds and other things available, but those are short-term. And we do not know how long this COVID-19 pandemic’s going to run.”

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