In line with the Biden administration’s nursing home reform initiatives outlined in February, the Centers for Medicare & Medicaid Services (CMS) is encouraging states to allocate Medicaid dollars toward improving staffing, and help the federal agency fully realize its goal of strengthening quality of care, accountability and transparency in the sector.
The agency listed several examples of states bumping up their Medicaid rates to support staffing and quality initiatives in a memo published on Monday – Illinois and California among them.
Illinois’s $700 million in facility staffing incentives, implemented this year, involve a data-driven staffing ratio program and wage incentive initiative – specifically the CNA tenure and promotion payments program to increase and maintain wages for certified nursing assistants.
California developed a quality and accountability supplemental payment initiative as well. Quality indicators defined by CMS reward facilities whose performance is at or above statewide average, a reflection of the five-star rating system on a national level.
“Through initiatives like these, we expect that Medicaid beneficiaries residing in nursing facilities will receive better care through the collaboration of CMS and states to realize the goals outlined in the White House Biden-Harris Administration’s Nursing Home Reform Action Plan,” Daniel Tsai, deputy administrator and director for the Center for Medicaid and CHIP Services, said in the memo.
He called Medicaid a “key lever” for accomplishing the goals set forth by the Biden administration.
Other reform initiatives, like reducing resident room crowding, can be solved in part with higher Medicaid payment rates for Medicaid residents in single occupancy rooms, Tsai said.
Mark Parkinson, president and CEO of the American Health Care Association (AHCA), recently told Skilled Nursing News that he has been encouraged by multiple states, a majority of which have stepped up during the pandemic by boosting Medicaid rates.
The challenge now is to convince state leaders to keep those increases permanent.
“That is our big priority for 2023,” Parkinson told SNN. “The reason that’s important is because costs have gone up so much. If you look at the cost of labor in skilled nursing facilities the average wage has gone up 9.5% — which is significantly higher than really any other health care setting.”
Increasing pressure on states
Financial backers in the space have echoed these sentiments, most notably Sabra Health Care REIT (Nasdaq: SBRA).
During the REIT’s earnings call earlier this month, CEO Rick Matros pointed toward states in their footprint that have yet to make their Medicaid increases permanent.
Texas, Kentucky and North Carolina all have continued their Medicaid percentage increase at least through the end of the year at 12%, 12% and 15%, respectively. Out of Sabra’s SNF properties, these states saw the highest increase to Medicaid.
At the time, Matros said SNF occupancy issues will drive Medicaid movement – the CMS call to action only amplifies pressure on states to solidify rate increases and push other states to get on board.
“Some of these states are starting to have some pretty serious access issues. That’s going to create a lot of bad headlines, so that will be a factor as well,” Matros said. “I think all of that is positive, and should go toward continuing the momentum.”
In the last six months, about 10% of Montana’s nursing home beds were taken offline with the closure of seven SNFs, while Iowa saw 11 nursing homes close in the past year.
“At [Health and Human Services (HHS)], we’re taking another critical step to implement President Biden’s bold set of reforms to improve our nation’s nursing homes,” HHS Secretary Xavier Becerra said in a statement. “We call on all states to work with us and ensure everyone has access to the high-quality care they deserve.”
CMS Administrator Chiquita Brooks-LaSure called the action an important step toward strengthening quality of care, accountability and transparency for Medicaid enrollees.
“We know that low wages for staff can contribute to frequent turnover and dangerous staffing shortages at nursing homes, so we encourage states to work with these facilities to find solutions for training and improving staffing,” she said.
Coupled with its call to tie Medicaid dollars to support federal reform initiatives, CMS strongly suggested states balance its spending and use of services and supports delivered in home and community-based settings relative to nursing home care.
The agency wants to see more Medicaid-covered HCBS care as an alternative to institutional care, including SNFs. As part of the American Rescue Plan, states plan to invest $25 billion to bolster HCBS; the “largest investment ever”, according to CMS.
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