A Broken System: New Proposals to Overhaul Nursing Homes Laid Out in Landmark Report

The way care is financed, delivered and regulated in the nursing home sector is both ineffective and inefficient, a new report from the National Academies of Sciences, Engineering, and Medicine found, as significant strategic investment will be needed to improve what has become a fragmented and unsustainable system.

The wide ranging report called for swift action, including establishing new standards to improve nursing home quality throughout the country.

While the pandemic devastated the nursing home industry, it also served as an opportunity for change and an impetus to drive critically needed innovations to the sector, said Betty Ferrell, report chair, professor and director of nursing research and education at City of Hope.

She’s not alone, either, as the White House’s sweeping nursing home reform package presented last month indicates there seems to be a growing appetite for rethinking the way long-term care is delivered.

Ferrell hosted a webinar on Wednesday where she and other researchers presented their conclusions and recommendations in an over 600-page report released on Wednesday.

While some of the recommendations, like identifying pathways to provide financial incentives to nursing homes for adoption of electronic health records and health information technology, are more modest, others, like transforming the way nursing homes are paid, have the potential for much further reaching implications.

The study — undertaken by the Committee on the Quality of Care in Nursing Homes — was sponsored by The John A. Hartford Foundation, The Commonwealth Fund, the Sephardic Foundation on Aging, the Jewish Healthcare Foundation, and The Fan Fox & Leslie R. Samuels Foundation.

It included 17 committee members across the long-term care space, who worked for 18 months and held six public information gathering sessions to consider their recommendations.

More needs to be done to strengthen the nursing home workforce, improve emergency preparedness, and increase the transparency and accountability of nursing home finances, the report found, and that can’t be accomplished by nursing home operators alone.

“What I think our committee learned is that this is a complicated puzzle, but the pieces have to come together. We can’t improve care unless we have a workforce in place that is trained to provide that care,” Ferrell told Skilled Nursing News.

“We can’t have a workforce in place and pay people to have good staff, unless we have regulation of the finances and the way that funds are spent,” she added.

National aging services organization LeadingAge called the report a “piercing wake up call” for the entire sector.

“The math is simple: Medicaid, the dominant payer of long-term care services, doesn’t fully cover nursing homes’ costs, especially the cost of providing quality care,” LeadingAge President and CEO Katie Smith Sloan said in a statement. “As policymakers consider how to enact the report’s recommendations, they must back their actions with sufficient funding to make changes a reality. Without that, the committee’s work will be for naught.”

Call for minimum staffing standards grows louder

In order to increase both the numbers and qualifications of the nursing home workforce, which stumbled even further in March with 2,500 more jobs lost, the report recommends establishing minimal and optimal staffing standards for all direct care staff, such as nurses, therapists, social workers and nursing assistants.

This report isn’t the first to recommend minimum staffing standards, but Harvard University professor David Grabowski, one of the researchers on the committee, thinks the time might be ripe to make it a reality.

“It’s been written before, but I really think we have this unprecedented opportunity right now, and indeed, President Biden recently put forward the idea of minimum staffing and a number of states are moving in this direction,” he said during the webinar. “So I think there’s a momentum that we haven’t had previously towards this objective, but we need to keep forward with it.”

Minimum staffing standard proposals have not come easily, however.

Gov. Kathy Hochul delayed implementation of a new staffing mandate in New York back in January, citing staffing shortages seen in facilities across the state. That law, which requires nursing homes to provide 3.5 hours of care per resident per day, officially went into effect on April 1 after the governor ended the temporary pause.

Still, Stephen Hanse, New York State Health Facilities Association president and CEO, said the laws do not reflect the current reality of New York’s long-term care landscape, calling it “unworkable.”

Before the law even went into effect, of the 611 nursing homes in the state 383 (63%) were considered below 3.5 hours per resident day staffing requirements.

Similarly, Rhode Island Gov. Daniel McKee recently signed an executive order back in January to delay a law that would fine nursing homes for failing to comply with minimum staffing requirements.

When the White House outlined plans to establish a staffing mandate – directing the Centers for Medicare & Medicaid Services to conduct a study to determine the level and type of staffing needed, and propose a new standard within one year – it was met with immediate disapproval.

American Health Care Association President and CEO Mark Parkinson called the minimum staffing requirement “unrealistic and not possible.”

Ensuring competitive wages and benefits including health insurance, childcare and sick pay for all nursing home workers is one way New York University’s Jasmine Travers said nursing homes can look to improve staffing levels, but as the report indicates, federal funding needs to come with new staffing and training requirements.

One way the sector could accomplish this is through the designation of a specific percentage of Medicare and Medicaid payments for direct care services for nursing home residents, including staffing, behavioral health and clinical care.

“Decades of evidence supports the need to enhance their training, salaries and working conditions yet little progress has been made to improve the quality of these jobs,” Travers said during the webinar.

Prioritizing transparency

Nursing home care in the U.S. is “broken” in more ways than one, according to Grabowski. One way he wants to see the industry fixed is through better and more effective oversight, and that starts with bringing more transparency to nursing home finances, operations and ownership.

“The Centers for Medicare & Medicaid Services makes some ownership information available but the data is incomplete, often difficult to use and does not allow for assessment of quality across facilities owned and operated by the same entity,” he explained.

Grabowski recommends collecting, auditing and making detailed facility-level data on the finances, operations and ownership of all nursing homes publicly available in real-time in readily usable database.

Complex arrangements like when a nursing home contracts with organizations to provide services like therapy, that also owned by the nursing home itself, seem to have little transparency into how the arrangement works.

When researching the topic of private equity in nursing homes, Dr. Atul Gupta, an associate professor at Wharton who spoke on the topic during a separate webinar last week, found that understanding ownership arrangements for nursing homes to be like navigating a “maze.”

“Increased transparency and accountability are needed to fully evaluate both how Medicare and Medicaid payments are spent and how ownership models and spending patterns impact the quality of care,” Grabowski added.

Improving oversight through the survey process

Although federal oversight standards and processes, such as surveyors, are designed to be uniform across states, considerable variation exists in the implementation of routine inspections, the imposition of sanctions and the investigation of complaints.

While the Biden administration’s reform calls for CMS to increase the maximum fines levied against nursing homes from $21,000 to $1 million, the report points to problems with the regulatory process as a whole that need to be addressed.

The survey process fails in some of its obligations, as it often doesn’t correct and prevent recurrence of problems and doesn’t investigate them in a timely manner, according to the report.

Establishing more consistency when it comes to how and when nursing homes are surveyed, inspected and cited has long been called for by both leaders and advocates in the sector, but more surveys and higher fines was not the solution operators had in mind.

Biden has also called on Congress to provide almost $500 million to CMS, a nearly 25% increase, to support nursing home health and safety inspections – an effort he seems to have doubled down on in his Fiscal Year 2023 budget release.

“It’s almost like a gotcha … we’re not going to provide you the money, we’re not going to provide you the education or support, but we’ll provide you the fines when you do something that we think is wrong,” Angela Schnepf, LeadingAge Illinois executive vice president, told SNN. “That does not help the residents, it doesn’t help the nursing home improve, it doesn’t help anyone except for the entity that’s collecting those fines.”

The report calls for more consistency when it comes to the survey process as well.

“We focused on oversight of state survey performance and I don’t think we’ve done an adequate job of really evaluating how states have done with this process and there’s way too much variability currently across states,” he said.

Michigan State Rep. Bronna Kahle introduced a bill last year to bring more consistency to the survey process moving forward as there appeared to be little correlation between the number of citations that nursing homes receive and the quality outcomes that they are trying to improve.

A 2020 report showed how inconsistent the survey and regulatory process had become as Michigan had been cited more than four times the national average for staffing ratios, when in fact the state was well above comparable national staffing ratios.

Grabowski said there’s a lack of consistency in whether or not states are identifying serious care problems, whether they’re fully correcting the prevention of a recurrence of problems or whether they’re investigating complaints in a timely manner.