Why States’ Success in Tying Medicaid to Staffing Could Propel CMS Policy

While establishing stronger staffing standards for nursing homes continues to be a top priority in the minds of federal leaders, few in the industry see it as a viable or sustainable path forward.

Given the current staffing climate, with the long-term care workforce down an estimated 15% since the start of the pandemic, any newly developed standard would have to come with a cash infusion. That’s why several states have tied Medicaid reimbursement incentives to staffing quality in recent months.

Unable to sustain unfunded mandates, senior living advocate and policy expert Brian Perry thinks tying increased reimbursement on a state-by-state level is a great “first step” but fixing the problem at the macro level is also needed.


“I do think that state’s putting forth incentivized ratios, things of that nature, probably is where this lands, but fixing [the workforce] pipeline has to be part of that conversation as well,” Perry told Skilled Nursing News.

Still, leaders with the Centers of Medicare & Medicaid Services (CMS) have indicated on more than one occasion that they are interested in exploring a change to how Medicaid dollars are spent, with more direct ties to staffing and care quality.

“We want to make sure that the dollars get to the direct care workforce to ensure high-quality care,” Daniel Tsai, deputy administrator and director of the center for Medicaid and CHIP Services, previously told Kaiser Health News.


CMS officials also foreshadowed the possibility of a Medicaid requirement at a nursing home roundtable in April hosted by the agency in Chicago. State officials, nursing home workers, residents and their families participated in discussions with CMS Administrator Chiquita Brooks-LaSure and CMS Principal Deputy Administrator and COO Jonathan Blum, along with Tsai.

During the roundtable discussion Tsai told reporters at the event, including SNN, that CMS was “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.”

The agency is also adding new requirements for surveyors to incorporate payroll based journal (PBJ) staffing data for inspections to help identify insufficient staffing levels.

Reimbursement incentives is the only way some industry gurus like Robert Applebaum, director of the Ohio Long-Term Care Research Project at Miami University, see staffing minimum standards being achievable.

“Medicaid drives the show in nursing homes and every state is struggling with Medicaid expenditures,” he told Skilled Nursing News. “At the end of the day we can all say we want better staffing, but until we’re ready to pay for it, it’s not going to happen.”

Some states, including Michigan and North Carolina, are looking to pass new measures to allocate additional cash infusions to direct care staff. Michigan previously enacted a temporary one-year increase to hourly pay for direct care staff and North Carolina approved $1 million in one-time bonus payments.

In Washington, D.C. approximately 80 to 85% of nursing home resident care is paid for using Medicaid funds, effectively making it “the beast that sets the tone on wages,” according to Forest Hills of DC CEO Tina Sandri.

In Illinois, a newly signed law, Illinois House Bill 246, took effect this month that looks to increase nursing home funding in the state by $700 million that is tied directly to staffing.

“There are very few losers in the new Illinois methodology and it doesn’t lock you into the standard as well. As you grow, you will see increases to your rate,” Illinois Health Care Association Executive Director Matt Hartman told Skilled Nursing News. “I look at it as incentivization.”

He said it’s not a silver bullet solution to the ongoing staffing woes, but it is a “stepping stone” to get Illinois facilities ahead of the curve.

“The 4.1 number you’ve heard about for years, it’s just a number, it doesn’t focus on resident care or need and doesn’t focus on the market at hand,” he said.

CMS makes staffing a top priority

The shift in how Medicaid dollars are spent is part of White House reforms introduced in February and remains central to CMS’s plans moving forward.

“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,” Brooks-LaSure told members of the press following a nursing home roundtable held in April.

The agency recently requested input from stakeholders on a measure that would look at staff turnover levels in nursing homes to be included in the SNF value-based purchasing (VBP) program and remains committed to creating minimum standards for nursing home owners when it comes to spending Medicaid reimbursement funds on direct care.

Hartman felt Illinois’ approach to the staffing crisis could serve as something of a “blueprint” or “roadmap” that other states and the federal government can use.

“We’re in full agreement with the government here,” he added. “Every study out there shows that the biggest drivers of quality and resident satisfaction are related to having exceptional levels of staffing.”

Still, he felt there had to be “some concomitance funding” to go along with a potential proposed staffing minimum.

CMS is expected to study the issue and introduce proposed rules on a minimum staffing level requirement within one year of President Biden’s State of the Union address held back in February.

National staffing standard could set the industry up for failure

Sandri wants to see more resources put forth at both the state and national level to help nursing homes with staffing.

“Just because you create a rule that you have to have staffing levels doesn’t make that curve magically go back up. There have to be resources that push that curve back up so that we even get back to pre-COVID staffing levels,” she said.

Forest HIlls currently sits with a 22% job vacancy rate as of June.

While D.C. has a minimum staffing requirement in place, Sandri says a temporary waiver is in place so she won’t get “dinged.” However, she worries about the long-term implications of this because when Covid goes away, the staffing shortage isn’t going to go away with it.

She worries a national staffing standard could lead to massive failure for nursing homes in an important and well reported metric, further eroding the public’s trust in the sector.

“If we go to this national staffing standard, the fear that I have is because that puts us in a place of failure, at least initially, and that initially could be for a long period of time,” she added.

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