Hands Are Tied: CMS Stands Firm on Timing of Nursing Home Medicare Funding Cuts

Nearly two weeks after the Centers for Medicare & Medicaid Services (CMS) announced a 4.6% cut related to the Patient-Driven Payment Model, Administrator Chiquita Brooks-LaSure doubled down on the timing of such cuts for the industry, saying the agency’s hands are effectively tied.

“I would say that we have statutory obligations, and that there are rules within what Congress does for us in terms of how we set rates and this is one that really is required given the trajectory,” Brooks-LaSure told Skilled Nursing News in an exclusive interview.

CMS – in its SNF Prospective Payment System proposed rule – recommended a 3.9%, or $1.4 billion, payment increase to the industry.

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The government agency has said it is “imperative” to act in an expedient manner once excess payments are identified, according to the proposed rule as published in the federal register.

The government agency also factored in a proposed downward adjustment to SNF payment rates by 4.6%, or $1.7B, to achieve budget neutrality. This amounts to a decrease of approximately $320 million in Medicare Part A payments to SNFs in FY 2023 compared to the prior fiscal year.

“We really want to work with the industry to continue to make sure that they are funded adequately. That’s really what our approach is, right, that we really see all of these issues in a comprehensive way,” she told SNN.

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Her comments came just hours after CMS unveiled a new data database on nursing home and hospital ownership, with the goal of providing more transparency to health care and informing policy decisions going forward.

Brooks-LaSure told reporters following a roundtable discussion with nursing home workers, advocates and state and federal officials that the amount of turnover – both at the staffing and ownership level in the nursing home industry – was of particular concern.

Between 2016 and 2021, 3,236 SNFs were sold – equating to 39.9 per 1,000 SNFs per year, according to the data.

“That’s one of the reasons why we’re rolling out the transparency piece that we’re rolling out today, making sure dollars are being spent well. That’s really one of our areas of focus and really wanting to hear how are these dollars being spent and what can we do differently,” Brooks-LaSure told SNN.

Also on the topic of transparency, CMS Principal Deputy Administrator and COO Jonathan Blum said the COVID-19 pandemic has shown that CMS’s approach likely needs to be refocused.

“We need to focus more on where we have the greatest risk for patient harm. We need to focus more on helping to support facilities, support workers who are trying to better care for their patients,” Blum told reporters.

Tying Medicaid reimbursement to staffing measures

As CMS closely watches states like Illinois and New York, who have tied funding to staffing measures, the agency is contemplating doing the same on the federal level.

Illinois House Bill 246, which would provide a $700 million increase to nursing home funding in the state, was passed by the legislature earlier this month.

Facilities would need to meet at least 70% of federal staffing level guidelines to get a bonus reimbursement; pay is based on their CMS quality star rating.

New York also passed legislation that went into effect April 1 which stipulates that 70% of a nursing home’s revenue is to be spent on direct resident care and at least 40% spent on staffing.

On the federal level, as part of the SNF proposed rule in light of the Biden administration’s reforms, CMS requested input from stakeholders on a measure that would examine staff turnover levels in nursing homes to potentially be included in its SNF value-based purchasing (VBP) program.

Currently, the program is designed to improve patient outcomes by awarding financial incentives or penalties based on 30-day hospital readmission rates. VBP sets a performance and improvement baseline for SNFs to meet in order to avoid a penalty.

“As we see states are really thinking about how can they make sure that they are paying for value … that’s something that we really want to work with states on the Medicaid side, and I would say we continue to look at ways that we can make sure that the dollar’s going out are being spent well,” Brooks-LaSure told SNN.

Daniel Tsai, deputy administrator and director of the Center for Medicaid and CHIP Services, said the agency is considering creating minimum standards for nursing home owners when it comes to spending Medicaid reimbursement funds on direct care.

“We are contemplating and eager for discussion on how we might create either transparency or standards for a minimum amount of reimbursement to actually flow to the direct care workforce versus all sorts of other things,” Tsai told reporters.

“That would be something that we are contemplating that would be a framework that would apply across the country with respect to Medicaid,” he added.

Staffing remains at the core of the conversation

Brooks-LaSure said in her ongoing discussions with various stakeholders over the last several months, staffing remains at the center of the conversation.

CMS in its proposed rule specifically requested feedback from stakeholders to help the agency establish minimum staffing requirements as part of Biden’s nursing home reforms.

The feedback, CMS said, will be used in conjunction with a research study being conducted to determine the optimal level and type of nursing home staffing needs.

CMS intends to issue proposed rules on a minimum staffing level requirement within one year of Biden’s State of the Union address.

“When we think about quality, what we’ve heard over and over is staffing, and we’ve heard that from residents – speaking directly to them – we’ve heard that from staff,” she told SNN.

Still, many in the industry are scratching their heads at the timing of the proposal, how it’s going to be paid for and where the workers are going to come from – at a time when prospective candidates are in short supply.

Since the start of the pandemic, the skilled nursing industry has lost 241,000 workers, or 15.2% of its total workforce.

Brooks-LaSure said that the agency will first prioritize gaining further transparency on how already existing federal dollars are being spent.

“So I think that one of the things that you’re hearing in this conversation is for us to have a better sense of where the dollars are going,” she told reporters. “So I would say that’s where we are first starting with having more transparency, and we’ve talked about some of the things we’re doing but moving in additional directions to make sure that the dollars that are being spent are going to direct care.”

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